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  • 1. Introduction to GAM Non-Directional Equity29-30 November 2012 Matt Lamb Head of Institutional and Fund Distribution (UK)This document is confidential and intended solely for the use of the person to whom it is given or sentand may not be reproduced, copied or given, in whole or in part, to any other person.
  • 2. Non-Directional EquityApplying a solid and consistent investment approach since 2002 ● Non-directional equity team with EUR 694.4m under management, based in Switzerland ● Formerly Arkos Capital SA, which became part of GAM Group AG in July 2012* ● A consistent approach, based on fundamental analysis and a bottom-up approach to stock selection ● Core team of seven long-standing and highly experienced investment professionals ● Managing a range of low volatility, liquid and transparent absolute return funds, both offshore and UCITS ● Significant portion of teams’ liquid assets invested in the fundsSource: GAM as at 31 Oct 2012. 2* For your information 74.95% of the capital of, and voting rights in, GAM Investment Management Lugano SA (formerly Arkos Capital SA) are owned by GAM Group AG, Zurich, which is a directly held100% subsidiary of GAM Holding AG. The remaining 25.05% are currently still owned by the senior investment management of GAM IM Lugano . However, agreements have been closed with themanagement of GAM IM Lugano for the future purchase of this remaining 25.05% by GAM Group AG.
  • 3. Range of strategies Developed Europe Description L/S equity non directional offshore fund, beta neutral, vol. lower than 6%. GAM Talentum Europe Long/Short1 Gross exposure 120 – 180% L/S equity non directional offshore fund, beta neutral, vol. lower than 12%. GAM Talentum Enhanced Europe Long/Short2 Gross exposure 240 – 360% L/S equity UCITS fund, beta between 0 and 0.5 a target vol of 8%. World Invest Absolute Return Gross exposure 140 – 210% Emerging Markets Description L/S equity offshore fund, beta between 0 and 0.5, target vol of 12%. GAM Talentum Emerging Long/Short3 Gross exposure 150 – 210% L/S equity UCITS fund, beta between 0 and 0.5, target vol of 8%. World Invest Absolute Emerging Gross exposure 100 – 140% Financials Description L/S equity UCITS fund, beta between 0 and 0.5, target vol of 8%. World Invest Absolute Financials Gross exposure 100 – 150% Convertibles Description World Invest Absolute Strategy Convertible Bonds UCITS fundSource: GAM 31. Formerly known as Talentum Activedge. 2. Formerly known as Talentum Enhanced. 3. Formerly known as Talentum Emerging Alpha Fund.
  • 4. GAM Talentum Enhanced Europe Long/Short - A EURPerformance from 30 Nov 2004 (inception) to 31 Oct 2012 Beta for Period GAM Talentum Enhanced Europe Long/Short 0.08 - A EUR – 18 months rolling beta v. FTSE Eurotop 100 Index in EURPast performance is not indicative of future performance. Performance is provided net of fees.Funds do not have the security of capital which is characteristic of a bank deposit.Source: GAM, Thomson Reuters, Bloomberg 4Statistics herein based on currency hedged indices, identified by ‘(GAM hedged)’ in their title, have been calculated by GAM with the aim of valid comparison to our currency hedged products. Details oftheir calculation are available on request.
  • 5. GAM Talentum Enhanced Europe Long/Short - A EURReturns from 30 Nov 2004 (inception) to 31 Oct 2012 Annual Performance Annualised Performance for Period %Past performance is not indicative of future performance. Performance is provided net of fees.Source: GAM, Thomson Reuters 5Statistics herein based on currency hedged indices, identified by ‘(GAM hedged)’ in their title, have been calculated by GAM with the aim of valid comparison to our currency hedged products. Details oftheir calculation are available on request.
  • 6. GAM Talentum Emerging Long/Short - A EURPerformance from 1 Feb 2007 (inception) to 31 Oct 2012 Beta for Period GAM Talentum Emerging Long/Short - A EUR - 18 months rolling beta v. MSCI Emerging 0.06 Markets Index (GAM hedged) in EURPast performance is not indicative of future performance. Performance is provided net of fees.Funds do not have the security of capital which is characteristic of a bank deposit.Source: GAM, Bloomberg 6Statistics herein based on currency hedged indices, identified by ‘(GAM hedged)’ in their title, have been calculated by GAM with the aim of valid comparison to our currency hedged products. Details oftheir calculation are available on request.
  • 7. GAM Talentum Emerging Long/Short - A EURReturns from 1 Feb 2007 (inception) to 31 Oct 2012 Annual Performance Annualised Performance for Period %Past performance is not indicative of future performance. Performance is provided net of fees.Source: GAM 7Statistics herein based on currency hedged indices, identified by ‘(GAM hedged)’ in their title, have been calculated by GAM with the aim of valid comparison to our currency hedged products. Details oftheir calculation are available on request.
  • 8. Generating returns from non-directional long/short equity investing Gianmarco Mondani Chief Investment Officer Non-Directional EquityThis document is confidential and intended solely for the use of the person to whom it is given or sentand may not be reproduced, copied or given, in whole or in part, to any other person.
  • 9. Overview of investment performanceAs at 31 Oct 2012 Performance Developed Europe YTD % SI % SI % pa Inception Date Volatility (SI) Fund Size EUR m GAM Talentum Europe Long/Short – A EUR 8.5 81.9 6.0 23 Jul 2002 4.2 39.9 GAM Talentum Enhanced Europe Long/Short – A EUR 18.7 123.4 10.7 30 Nov 2004 9.3 140.7 World Invest Absolute Return – C EUR1 10.6 75.8 6.1 7 Apr 2003 5.4 181.5 Emerging Markets2 GAM Talentum Emerging Long/Short – A EUR 13.0 63.5 8.9 1 Feb 2007 6.8 53.6 World Invest Absolute Emerging – C EUR 7.3 22.3 6.3 10 Jul 2009 5.2 59.6 Financials World Invest Absolute Financials – C EUR 6.3 4.9 1.9 7 May 2010 5.7 16.9 Convertibles World Invest Absolute Strategy – C EUR 11.1 9.5 1.9 2 Jan 2008 9.2 115.1 Other 87.23 Total AuM 694.4Past performance is not indicative of future performance. Performance is provided net of fees.Source: GAM. Fund sizes may not sum exactly due to rounding. 1. Prior to 2009 World Invest Absolute Return was not a sophisticated UCITS fund, performance before that time may not be an accurate 9guide as the fund was shorting futures rather than individual stocks, whilst also retaining a net long exposure by mandate. For a more accurate guide to performance prior to 2009 a comparison with GAMTalentum Europe Long/Short is advised. 2. Up to Dec 2011 GAM Talentum Emerging Long/Short and World Invest Absolute Emerging were run pari-passu. As of Dec GAM Talentum Emerging Long/Shorthas 1.5x the gross exposure of World Invest Absolute Emerging. 3. Includes Long Only Fund (EUR4.2m) and Managed Accounts (EUR83.0m).
  • 10. Investment philosophyOur edge lies in our ability to identify stocks that will surprise by exceeding or falling short of analysts’ expectations ● We believe that current stock prices reflect all available market information and this is also reflected in analysts’ consensus on earnings expectations ● Therefore, in order to make money we need to anticipate changes: We buy a stock if we believe that it will beat analysts’ expectations We sell a stock if we believe that it will miss analysts’ expectations 10
  • 11. Changes in earnings expectationsEarnings expectations – Developed Europe ● The blue line shows the relative performance of a portfolio of Stocks with earnings upgrades outperforming stocks acquired on a monthly the underlying MSCI Europe index basis that in the previous 3 months have experienced the best positive revisions ● The orange line shows the relative performance of a portfolio of stocks acquired on a monthly basis that in the previous 3 months have experienced the worst negative Stocks with earnings downgrades underperforming revisions the underlying MSCI Europe indexSource: BoAML, MSCI. Data for period 31 Dec 1992 to 31 Oct 2012. 11
  • 12. Changes in earnings expectationsEarnings expectations – Emerging Markets ● The blue line shows the relative performance of a portfolio of stocks acquired on a monthly Stocks with earnings upgrades outperforming basis that in the previous 3 the underlying GEM Index months have experienced the best positive revisions ● The orange line shows the relative performance of a portfolio of stocks acquired on a monthly basis that in the previous 3 months have experienced the worst negative revisions Stocks with earnings downgrades underperforming the underlying GEM IndexSource: BofA Merrill Lynch. Data shown for the period 31 Dec 1992 to 31 Oct 2012. 12
  • 13. Investment approachA stock selection approach based on bottom-up, fundamental analysis ● Historical evidence shows that earnings’ revisions work best if supported by valuation and price momentum ● If the valuation is supportive we can have a bigger weighting – Cheaper (more expensive) companies tend to appreciate (depreciate) more on earnings revision than those that are more expensive (cheaper) ● If price momentum is supportive we have a higher degree of confidence – We buy on strength, we sell on weakness ● Our fundamental, alpha-generating investment approach has driven every investment decision since 2002 ● Quantitative tools are used exclusively to identify investment ideas and for risk management purposes 13
  • 14. Investment processOverview Risk management Qualitative conditioning overlay 1 2 3 Idea generation Stock selection Portfolio construction and management  Quant screen  Fundamental analysis  Pre-trade risk analysis (StarMine)  Company contacts  Sizing of positions  Targeted consensus screen  Portfolio robustness continuous assessment  Company meetings Investment guidelines and internal rules 14
  • 15. Idea generationQuantitative screening – StarMineDetermineswhich stocks… …are candidates for long or short …appear to be relatively cheap or … and have momentum positions based on revisions expensive… for next year. Component Price Earnings + Valuation + momentum Features Provides percentile ranking of Provides reasonable stock Provides percentile ranking of stocks based on changes in valuation based on blend of P/E, stocks based on recent 6-12 EPS, EBITDA and revenue P/B, P/CF, dividend yield months price performance estimates EV/Sales and EV/EBITDA Benefits Earnings revisions Identifies potential to make Allows us to buy on strength are serially correlated further gains when valuation is and sell on weakness supportive 15
  • 16. Idea generationTargeted consensus screen and company meetings Targeted EPS, for Broker Screen1 Domicile consensus-2012 % Diff Company P/E % vs. Name Curr. Ctry. Cons. Prev Current change Cons. Cons. Broker: ABC Estimates updated following forecasts reviews of Mediaset EUR Italy 18x 0.08 0.07 -12.5% 0.11 -30.0% Mediaset Espana. Also cut Q2 advertising forecasts from -11% to -12.5% (EUR 16m) Estimates updated driven by improved FX Danone EUR France 16x 3.20 3.40 6.00% 3.40 = transaction (weak Euro) Increases estimates by 5% for coming years Teleperf. EUR France 9x 2.20 2.30 5.00% 2.20 5.00% mainly due to better cost control ● Constant focus on the consequence of “changes” ● Regular meetings with companies and regular contact with their management ● Communication with brokers concentrating only on earnings expectations, not on buy/sell ● Analysis and cross-referencing of information with recommendations or price targets sector/ industry peers ● Attendance at relevant sector/country conferences 161. For illustrative purposes only.
  • 17. Current positioning and outlookThis document is confidential and intended solely for the use of the person to whom it is given or sentand may not be reproduced, copied or given, in whole or in part, to any other person.
  • 18. Current environmentOur view has been the same for a while Background ● Distinct lack of earnings growth due to slow real growth in global GDP ● Any growth in earnings would be primarily driven by inflation, anyway marginal ● Analysts forecasted 2012 earnings growth to be 12%, have now revised expectations for 2012 earnings growth to be -3% ● Analysts currently forecast 2013 earnings growth to be 10%, we believe this to be unrealistic ● Opportunity for absolute re-rating of stock markets limited, as rates no longer falling Implications for our strategy ● We don’t believe markets have much mileage, however lack of economic growth means huge distinction between companies that can deliver growth and positive earnings surprises versus those with who deliver the opposite ● This has been the situation in Spain and Italy for the last two years and Japan in the 1990’s ● We continue to see ample opportunity for differentiation, this has been the driving factor in performance over the last 3 years Portfolio ● Long book: Companies whose prospects are dependant on their own actions and can surprise positively – PE’13 is 12x (PE ’12 is 13x): consensus expects 10% growth and can be beaten ● Short book: Companies with structural problems – PE’13 is 12.5x (PE ‘12 is 15.4x): consensus expects 23% earnings growth which is unlikelySource: GAM as at 31 Oct 2012. 18
  • 19. Current positioning – Long book Long visible growth Overall long companies with visible growth due to structural opportunities or restructuring.  Growth stocks (BIC, Diageo, Reed, Babcock, Ryanair, Easyjet, Viscofan, Capita, Dufry)  Oil capex (Seadrill, PGS)  Structural growth in tech (ASMI, Austriamicrosystems, Unit4, Atos, Micro Focus)  Price power in insurance (Prudential, RSA, Tryg, Gjensidije) and client offering in Italian asset management (Azimut, Mediolanum)  Self help restructuring in cyclicals (Prysmian, Bilfinger, TUI, Oerlikon, Smurfit) Long book PE ’13 is 12x (PE ’12 is 13x) consensus expects 10% growth, this can be beatenSource: GAM as at 31 Oct 2012. 19
  • 20. Current positioning – Short book Short structural problems Short companies with structural problems within industry or facing new challenges  Entrenched structural problems of overcapacity (Legrand, Mittal, France Telecom, TPSA, Geox, CRH, Kingfisher)  European utilities (Verbund, Fortum, Veolia, GDF)  Media disintermediation (TF1, Mediaset, Sanoma)  Spanish and Central European banks  Next shoes to drop (Straumann, Jeronimo Martins, ABB, Sandvik) Short book PE’13 is 12.5x (PE’12 is 15.4x) consensus expects 23% growth, reversal only if you hope for strong economic growthSource: GAM as at 31 Oct 2012. 20
  • 21. Developed EuropeThemes GAM GAM Talentum World Invest Sector – % breakdown Talentum Europe Enhanced Europe Absolute Return Banks 1.4 2.9 1.7 Basic Materials 0.0 0.0 0.0 Consumer Cyclicals -0.9 -1.7 -1.0 Consumer Non-Cyclicals 1.5 3.1 1.8 Diversified Financials & REIT 2.1 4.3 2.5 Energy 1.0 2.1 1.3 Futures 0.0 0.0 0.0 Health Care -2.0 -4.0 -2.4 Industrials -1.9 -3.9 -2.1 Insurance 4.1 8.4 4.9 Media 0.2 0.4 0.2 Option 0.2 0.4 0.2 Services Cyclicals -0.3 -0.7 -0.4 Services Non-Cyclicals 5.1 10.1 6.0 Technology 4.1 8.3 4.7 Telecommunication Services -0.4 -0.8 -0.5 Utilities -1.1 -2.1 -1.2 Long 54 110 64 Short -41 -83 -48 Net 12 27 16 Gross 96 193 113Source: GAM as at 31 Oct 2012. NOTE: Index positions broken down into individual sectors. 21Allocations and holdings are subject to change.
  • 22. Current alpha opportunities in emerging markets 1. Consumer Sector – Long Companies in countries with low penetration of organized retailers and growing GPD per capita (Exito in Colombia, Controladora Mexicana in Mexico, Shoprite in South Africa) – Short low value added Food Processors suffering from high input cost pressure (Mexico and Brazilian companies) 2. Financial Sector – Long Insurers in South Africa with untapped growth potential in low income bracket and Rest of Africa (Sanlam, RMI) – Short South African bank with structurally high costs and unhealthy reliance on M&A for growth 3. Materials Sector – Long phosphate producer in Russia (Phosagro) and copper producer in Turkey (Park Elektrik) – Short bulk materials producers in Poland (JSW) 4. Industrial Sector – Long auto and tractor manufacturers in Turkey (Tofas, Turk Traktor) – Short companies exposed to mining and infrastructure cycle in South Africa (Murray & Roberts, Aveng)Source: GAM as at 31 Oct 2012. 22The views expressed are those of the manager at the time of publication and are subject to change.
  • 23. World Invest Absolute EmergingBreakdown as at 31 Oct 2012 Sector positions Long % Short % Net % Geographic exposure Long % Short % Net % Consumer Middle East 4.8 0.0 4.8 13.9 0.0 13.9 Discretionary South Africa 14.5 -10.1 4.4 Consumer Staples 12.5 -4.3 8.3 W. Europe 6.9 -3.6 3.2 Energy 1.3 -2.8 -1.5 Czech Republic 0.4 0.0 0.4 Turkey 9.3 -2.4 6.8 Financials 17.1 -10.4 6.8 Brazil 6.7 -5.8 0.9 Industrials 7.9 -6.7 1.2 Scandinavia 0.0 -1.8 -1.8 Information Mexico 4.6 -2.4 2.1 3.6 -1.7 1.9 Technology Poland 0.0 -5.3 -5.3 Materials 5.8 -6.5 -0.7 CIS 0.0 -0.9 -0.9 Telecommunication Egypt 1.4 0.0 1.4 2.7 -4.2 -1.4 Services Russia 7.5 -4.5 3.0 Utilities 2.7 -2.6 0.1 Chile 4.4 -1.8 2.6 Panama 1.3 0.0 1.3 Colombia 2.9 0.0 2.9 Asia 3.2 -0.5 2.7Source: GAM as at 31 Oct 2012. 23Allocations and holdings are subject to change. Holdings breakdown shown without Bonds, Options, Sector look through for Index product.
  • 24. Overview of productsThis document is confidential and intended solely for the use of the person to whom it is given or sentand may not be reproduced, copied or given, in whole or in part, to any other person.
  • 25. Key characteristics – Developed Europe Name GAM Talentum Europe Long/Short GAM Talentum Enhanced Europe Long/Short World Invest Absolute Return Developed Europe long / short Developed Europe long/short equity fund Developed Europe long/short equity fund with a non Strategy equity fund with a low beta with a non directional objective directional objective objective Same long and short positions (through swaps and single stock 2x leveraged version of futures) as Flagship European Description Low vol, beta neutral, all market cap GAM Talentum Europe Long/Short Equity L/S Non Directional Hedge Fund, Beta up to 0.5, all market cap Fund type Offshore Offshore UCITS Gianmarco Mondani, Roberto Cantaluppi Gianmarco Mondani, Roberto Cantaluppi and Paolo Gianmarco Mondani, Roberto Fund manager and Paolo Longinotti Longinotti Cantaluppi and Paolo Longinotti Inception date 23 Jul 2002 30 Nov 2004 7 Apr 2003 Typical number of positions 90-140 90-140 90-140 Target gross exposure 120-180% 240-360% 140-210% Monthly on 30 days notice Monthly on 30 days notice Dealing Daily No lock-up No lock-up 1.0% management fee 1.75% management fee 1.5% management fee Fees 20% performance fee on a high watermark 15% performance fee on a high 20% performance fee on a high watermark basis basis watermark basis Minimum investment EUR/USD 100,000 EUR/USD 100,000 EUR 5,000 ISIN (EUR/USD) KYG8668M1006/ KYG8668M1188 KYG8668P1037/ KYG8668P1110 LU0028583804 25
  • 26. Key characteristics – Emerging Markets Name GAM Talentum Emerging Long/Short World Invest Absolute Emerging Emerging market long/short equity fund Emerging market long/short equity fund Description with a low beta objective with a low beta objective Fund type Offshore UCITS Fund managers Enrico Camera and Iain Cartmill Enrico Camera and Iain Cartmill Inception date 1 Feb 2007 10 Jul 2009 Typical number of positions 50-80 50-80 Target gross exposure 150-210%1 100-140% Monthly on 30 days notice Dealing Daily No lock-up 2% management fee 2% management fee Fees 20% performance fee on a high 20% performance fee on a high watermark basis watermark basis Minimum investment EUR/USD 100,000 EUR 5,000 ISIN (EUR/USD) KYG8669L1014/ KYG8669L1196 LU04351153071 The target gross exposure was raised to 150-210% on 1 Dec 2011. 26
  • 27. Performance and analysisThis document is confidential and intended solely for the use of the person to whom it is given or sentand may not be reproduced, copied or given, in whole or in part, to any other person.
  • 28. GAM Talentum Europe Long/Short - A EURPerformance from 23 Jul 2002 (inception) to 31 Oct 2012 Beta for Period GAM Talentum Europe Long/Short - A EUR – 0.01 18 months rolling beta v. FTSE Eurotop 100 Index in EURPast performance is not indicative of future performance. Performance is provided net of fees.Funds do not have the security of capital which is characteristic of a bank deposit.Source: GAM, Thomson Reuters, Bloomberg 28Statistics herein based on currency hedged indices, identified by ‘(GAM hedged)’ in their title, have been calculated by GAM with the aim of valid comparison to our currency hedged products. Details oftheir calculation are available on request.
  • 29. GAM Talentum Europe Long/Short - A EURReturns from 23 Jul 2002 (inception) to 31 Oct 2012 Annual Performance Annualised Performance for Period %Past performance is not indicative of future performance. Performance is provided net of fees.Source: GAM, Thomson Reuters 29Statistics herein based on currency hedged indices, identified by ‘(GAM hedged)’ in their title, have been calculated by GAM with the aim of valid comparison to our currency hedged products. Details oftheir calculation are available on request.
  • 30. GAM Talentum Enhanced Europe Long/Short - A EURPerformance from 30 Nov 2004 (inception) to 31 Oct 2012 Beta for Period GAM Talentum Enhanced Europe Long/Short 0.08 - A EUR – 18 months rolling beta v. FTSE Eurotop 100 Index in EURPast performance is not indicative of future performance. Performance is provided net of fees.Funds do not have the security of capital which is characteristic of a bank deposit.Source: GAM, Thomson Reuters, Bloomberg 30Statistics herein based on currency hedged indices, identified by ‘(GAM hedged)’ in their title, have been calculated by GAM with the aim of valid comparison to our currency hedged products. Details oftheir calculation are available on request.
  • 31. GAM Talentum Enhanced Europe Long/Short - A EURReturns from 30 Nov 2004 (inception) to 31 Oct 2012 Annual Performance Annualised Performance for Period %Past performance is not indicative of future performance. Performance is provided net of fees.Source: GAM, Thomson Reuters 31Statistics herein based on currency hedged indices, identified by ‘(GAM hedged)’ in their title, have been calculated by GAM with the aim of valid comparison to our currency hedged products. Details oftheir calculation are available on request.
  • 32. World Invest Absolute Return - C EURPerformance from 7 Apr 2003 (inception) to 31 Oct 2012 Beta for Period World Invest Absolute Return – 0.16 C EUR - 18 months rolling beta v. FTSE Eurotop 100 Index in EUR1 1. From inception of the strategy in Apr 2003 to Nov 2008, the mandate was to have a low volatility product with aPast performance is not indicative of future performance. Performance is provided net of fees. modest beta (target beta of 0.3).Funds do not have the security of capital which is characteristic of a bank deposit.Source: GAM, Thomson Reuters, Bloomberg 32Statistics herein based on currency hedged indices, identified by ‘(GAM hedged)’ in their title, have been calculated by GAM with the aim of valid comparison to our currency hedged products. Details oftheir calculation are available on request.
  • 33. World Invest Absolute Return - C EURReturns from 7 Apr 2003 (inception) to 31 Oct 2012 Annual Performance Annualised Performance for Period %Past performance is not indicative of future performance. Performance is provided net of fees.Source: GAM, Thomson Reuters 33Statistics herein based on currency hedged indices, identified by ‘(GAM hedged)’ in their title, have been calculated by GAM with the aim of valid comparison to our currency hedged products. Details oftheir calculation are available on request.
  • 34. GAM Talentum Emerging Long/Short - A EURPerformance from 1 Feb 2007 (inception) to 31 Oct 2012 Beta for Period GAM Talentum Emerging Long/Short - A EUR - 18 months rolling beta v. MSCI Emerging 0.06 Markets Index (GAM hedged) in EURPast performance is not indicative of future performance. Performance is provided net of fees.Funds do not have the security of capital which is characteristic of a bank deposit.Source: GAM, Bloomberg 34Statistics herein based on currency hedged indices, identified by ‘(GAM hedged)’ in their title, have been calculated by GAM with the aim of valid comparison to our currency hedged products. Details oftheir calculation are available on request.
  • 35. GAM Talentum Emerging Long/Short - A EURReturns from 1 Feb 2007 (inception) to 31 Oct 2012 Annual Performance Annualised Performance for Period %Past performance is not indicative of future performance. Performance is provided net of fees.Source: GAM 35Statistics herein based on currency hedged indices, identified by ‘(GAM hedged)’ in their title, have been calculated by GAM with the aim of valid comparison to our currency hedged products. Details oftheir calculation are available on request.
  • 36. World Invest Absolute Emerging - C EURPerformance from 10 Jul 2009 (inception) to 31 Oct 2012 Beta for Period World Invest Absolute Emerging - C EUR - 18 months rolling beta v. MSCI Emerging Markets 0.07 Index (GAM hedged) in EURPast performance is not indicative of future performance. Performance is provided net of fees.Funds do not have the security of capital which is characteristic of a bank deposit.Source: GAM, Bloomberg 36Statistics herein based on currency hedged indices, identified by ‘(GAM hedged)’ in their title, have been calculated by GAM with the aim of valid comparison to our currency hedged products. Details oftheir calculation are available on request.
  • 37. World Invest Absolute Emerging - C EURReturns from 10 Jul 2009 (inception) to 31 Oct 2012 Annual Performance Annualised Performance for Period %Past performance is not indicative of future performance. Performance is provided net of fees.Source: GAM 37Statistics herein based on currency hedged indices, identified by ‘(GAM hedged)’ in their title, have been calculated by GAM with the aim of valid comparison to our currency hedged products. Details oftheir calculation are available on request.
  • 38. AppendixThis document is confidential and intended solely for the use of the person to whom it is given or sentand may not be reproduced, copied or given, in whole or in part, to any other person.
  • 39. Stock selectionFundamental analysis Goal Determine which companies are likely to beat/miss analysts’ expectations on a 12-month view Approach 1. Analyse stocks that quantitative and qualitative screening suggests are most likely to experience positive (negative) revisions 2. Select those most likely to produce further positive (negative) surprises and trigger further changes in estimates 3. Compare sell-side research, check assumptions directly with management and challenge consensus view Factors In-depth analysis of influential factors based on P&L, balance sheet and cash flow analysis Results Stocks for potential inclusion in portfolio 39
  • 40. Stock selectionFundamental in-depth analysis enables team to form medium-term view P&L Cash Flow Balance Sheet Revenues: EBITDA – interest – tax – capex: Debt levels: Quantity by price by currency plus Can the company support its What is appropriate? acquisitions minus disposals growth? Provisions: Gross margin: Working capital: What are the future cash costs? Measure of value added, mostly Must grow no more than sales, can variable costs make a company bankrupt or reduce Goodwill: its competitiveness Impairment test - can it cause equity Goodwill depreciation ratios to stretch? If negative: Operating margin: Can the balance sheet take it? Who Influenced by fixed costs, prices is paying for this? Interest costs: Leverage can be good but it is a fixed cost Associates (a separate company) and minorities (one way to fool you) Dividends: Are they sustainable? 40
  • 41. Qualitative conditioning overlayActive management of portfolio level volatility and make portfolio more robust during market turmoil ● Earnings revisions have the upper hand unless there is market turmoil – Eg economic turning points or periods of unusual market behaviour (eg extreme short-term volatility) ● Qualitative conditioning overlay seeks to protect our approach from pressure it can experience at such times through Macroeconomic Impact at sector/ Impact at Provides portfolio assessment industry level stock level robustness during brief periods when earnings revisions are not a good Impact of decisions at portfolio level indicators of future price movements ● This ongoing process is based on the analysis of macroeconomic indicators – Such as ECRI, US ISM, EU PMI, Baltic Dry Index etc ● Reduces gross portfolio exposure and exposure to the most sensitive sectors during periods of turmoil 41
  • 42. Portfolio construction and managementBottom-up approach featuring strict discipline and ongoing monitoring Goal Build and maintain portfolios that: 1. Hold only companies satisfying our fundamental analysis criteria 2. Are in line with the qualitative conditioning process 3. Are consistently robust and liquid in accordance with investment guidelines Approach ● Invest team constructs portfolio from bottom up using pre-trade risk analysis for each position ● Size trades according to our level of conviction, volatility and liquidity ● Maintain diversification through – Abiding by clear maximum exposure rules for each stock – Single stock exposures never greater than 3 days’ trading volume – Daily controls of exposure to market as per mandate – Actively managing correlations between positions Limits ● No specific country exposure (ex Emerging Markets strategies) or sector limits and ● No automatic lock-in of profits rules ● Dynamic stop-loss policy; not automatic one Results Low beta, well-diversified portfolio with strict risk controls 42 Result:
  • 43. Risk managementMaintain risk proactively at each stage of the investment process Goal Maintain risk proactively at each stage of the investment process (idea generation, portfolio construction and portfolio management) ● Robust risk management framework built around and integrated with investment approach Structure ● Set of risk management tools utilised by investment team as part of ex-ante analysis Pre-trade ● Correlation management to avoid unwanted bets (adjusted Beta and t-Stat) risk controls ● Stress test analysis ● Liquidity/volume ● Volatility ● Long, short, gross and net exposure ● Proprietary (style) indicator of short-term overbought or oversold stocks 43
  • 44. Risk management function ● Risk manager has independent supervisory function and operates at arms’ length ● Monitors adherence to: – Investment guidelines – Internal investment rules – Restrictions and risk limits ● Initiates appropriate corrective actions in case of any transgression ● In addition to the pre-trade risk analysis, the risk manager performs regular checks on: – Capacity limits – Sector and geographical exposure – Consistency between what quantitative data suggest and existing portfolio (comparison of portfolio longs and shorts versus what quantitative indicators tell us about each position) – Dynamic stop/loss analysis – Performance attribution 44
  • 45. Risk managementCorrelation management Factors correlation beta t-stat Factors correlation beta t-stat EUR-USD X-RATE -0.071 -0.070 -2.197 S&P EU 350 CONS DISCT IX 0.324 0.017 1.251 EUR-CHF X-RATE -0.009 -0.066 -0.325 S&P EU 350 UTILITIES IDX -0.016 -0.043 -2.749 GBP-EUR X-RATE 0.147 0.095 2.149 S&P EU 350 MATERIALS IDX 0.201 -0.004 -0.335 GOLD SPOT $/OZ -0.149 -0.042 -2.201 S&P EU 350 FINANCIALS IX 0.090 -0.019 -1.743 DJ UBS INDUST METALS -0.020 -0.028 -1.925 S&P EU 350 HEALTHCARE IX 0.393 0.055 2.437 FTSE EUROTOP 100 INDEX 0.253 0.000 0.000 S&P EU 350 INFO TECH IDX 0.374 0.026 2.051 CAC 40 INDEX 0.127 -0.016 -1.339 S&P EU 350 INDUST INDEX 0.193 -0.006 -0.467 MILAN MIB40 INDEX -0.062 -0.029 -3.465 CYC-NCYC 0.067 -0.020 -1.111 DAX INDEX 0.244 0.001 0.088 LARGE-SMALL -0.012 -0.031 -0.858 FTSE 100 INDEX 0.314 0.018 0.941 VALUE-GROWTH -0.482 -0.206 -6.895 IBEX 35 INDEX -0.124 -0.031 -3.946 EURO-BUND -0.084 0.029 0.758 SWISS MARKET INDEX 0.348 0.039 1.632 VIX -0.185 -0.002 -0.656 NASDAQ 100 STOCK INDX 0.155 0.000 0.009 S&P 500 INDEX 0.205 0.007 0.351 VSTOXX -0.149 0.001 0.444 BLP European Consumer Cyclical 0.305 0.013 0.997 US BREAK EVEN INFL RATE 10YR 0.065 0.089 0.771 BLP European Consumer Non-Cyclical 0.483 0.085 3.547 EUR-JPY X-RATE 0.112 -0.007 -0.263 DJ EURO STOXX LARGE P = 0.126 -0.018 -1.396 JAPANESE JPY SPOT 0.277 0.100 2.403 DJ EURO STOXX SMALL P = 0.134 -0.015 -1.132 RUSSELL 2000 0.159 0.001 0.084 DJ STOXX TMI VALUE P = 0.122 -0.024 -1.517 WTI Crude Oil 0.169 0.006 0.602 DJ = STXX TMI GRWTH P = 0.337 0.019 1.209 DEFENSIVE vs AGGRESSIVE 0.008 0.040 1.455 US 10Y BOND -0.179 -0.043 -0.672 EUR-SEK X-RATE 0.060 0.033 0.887 S&P EUROPE 350 ENERGY IX 0.196 -0.006 -0.381 SWEDISH MARKET INDEX 0.223 0.003 0.221 S&P EU 350 CON STAPLE IX 0.490 0.087 3.958 MSCI Emerging Free 0.241 0.014 0.797 S&P EU 350 TELECM SV IDX 0.027 -0.037 -2.123 Dax-Ibex spread 0.381 0.062 5.948  We want to ensure that the  We use a proprietary risk management tool that portfolio performance only reflects measures the current portfolio’s correlation to a calculated bets. wide variety of factors.Source: GAM as at 31 Oct 2012. 45
  • 46. Example of one long investment – BICFrom end of Aug 2007 to end of Aug 2012Source: Bloomberg (as of end of August). 46References to any security or company are not a recommendation to buy or sell any security and are for information purposes only.
  • 47. Stock examplesLong example – BIC Company background ● Leading consumer staple company with leading positions in lighters, shavers and stationary ● Growing presence in emerging markets ● 20% margin helped by 37% margin in lighters ● Strong net cash position (400m) Position history ● Analysts were expecting no growth in 2012 EBIT vs 350m in 2011 ● But BIC has growth opportunities in all divisions. Simply assuming some 10m help from currency and 10m growth (5%) in lighters where they are rapidly internationalising, one could see positive revisions We added to the stock in December 2011 ● After very strong q1 and q2 organic growth (10% and 6%) in consumer, consensus upgraded estimates. But still, factoring in that the APP division losses have been erased, consensus implies almost no growth in 2H and in 2013 where the special 11m bonus to employees won’t recur. We expect more than 400m EBIT ● Valuation was only 12 times PE despite more than 10% of market cap in cash. After a big rise (30% YTD) it still trades on 12 times PE adjusted for cash We are still long the stockReferences to any security or company are not a recommendation to buy or sell any security and are for information purposes only. 47
  • 48. Example of one short investment – VallourecFrom 31 Aug 2007 to 24 Aug 2012Source: Bloomberg (as of end of August). 48References to any security or company are not a recommendation to buy or sell any security and are for information purposes only.
  • 49. Stock examplesShort example – Vallourec Company background ● Leading stainless steel tube manufacturer ● We saw big capacity additions in the industry in the period to 2014 bringing prices down ● Vallourec had already profit warned due to problems in ramping up their new Brazilian and US facility Position history ● Consensus was assuming growth in EBITDA from 1.1bn pre Brazilian losses despite no evidence of any improvement in Brazilian operations, lack of additional room to increase volumes and pricing offset by raw materials. We expected a decline ● Valuation was expensive as the apparently cheap PE (10 times) on consensus earnings was offset by a premium to book value We shorted Vallourec in August 2011 (price 57 euro) ● Through several profit warnings in the 1H of 2012 Vallourec admitted to its problems, to which the falling iron ore prices were added ● Estimates reached our level of some 830m EBITDA in 2012 in mid May after an additional profit warning We closed the short at a price of 32 euroReferences to any security or company are not a recommendation to buy or sell any security and are for information purposes only. 49
  • 50. GAM Talentum Europe Long/Short - A EURMonthly performance GAM Talentum Europe Long/Short – A EUR % return Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD 2012 -0.4 1.7 2.1 0.7 -0.1 0.5 2.1 0.0 0.6 0.9 8.5 2011 -3.1 -0.1 1.2 0.2 -0.2 2.2 0.1 -1.3 0.4 0.6 0.8 0.9 1.7 2010 0.8 1.4 1.9 0.2 -0.3 0.3 0.1 0.8 0.3 0.8 0.8 0.8 8.3 2009 1.5 1.2 -1.7 -4.2 0.2 0.6 -0.7 0.0 0.9 0.5 1.0 0.5 -0.4 2008 0.3 1.6 0.5 1.9 0.5 2.2 -2.5 -1.1 -5.9 0.4 -0.2 0.2 -2.2 2007 1.7 0.0 0.5 0.9 0.9 1.2 0.8 -0.5 2.8 1.9 -0.6 1.3 11.2 2006 2.6 0.3 1.9 1.3 -0.9 -0.4 0.7 0.4 -0.6 0.9 0.8 1.3 8.6 2005 1.5 0.6 0.8 0.2 0.3 2.0 1.1 1.7 2.5 -1.8 0.6 0.7 10.6 2004 2.5 1.4 0.1 0.4 -0.1 -0.2 1.7 1.4 0.6 -0.1 1.6 1.3 11.1 2003 -0.6 2.5 -0.7 1.0 0.4 -0.8 0.4 0.4 0.8 0.8 0.0 0.3 4.6 2002 0.2 -0.3 1.2 -0.6 -0.2 0.4 0.7Past performance is not indicative of future performance. Performance is provided net of fees.Source: GAM 50
  • 51. GAM Talentum Enhanced Europe Long/ShortMonthly performance GAM Talentum Enhanced Europe Long/Short – A EUR % return Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD 2012 -0.6 3.6 4.2 1.4 -0.2 1.1 4.4 0.1 1.3 2.1 18.7 2011 -6.1 -0.2 2.5 0.4 -0.8 4.5 0.3 -2.6 0.5 1.1 1.6 1.9 2.9 2010 1.7 2.9 4.3 0.8 -0.7 0.9 0.1 1.8 0.6 1.6 1.7 1.5 18.4 2009 3.0 2.6 -3.7 -8.3 0.5 1.2 -1.4 -0.1 1.9 1.0 2.1 0.8 -0.8 2008 0.4 3.4 1.0 3.6 1.0 4.0 -5.0 -2.5 -12.9 -0.1 -0.7 0.3 -8.5 2007 3.0 0.0 0.9 1.5 1.6 2.2 1.4 -1.2 5.5 3.5 -1.4 2.4 21.0 2006 5.1 0.5 3.5 2.4 -1.9 -0.8 1.3 0.6 -1.4 1.5 1.5 2.3 15.3 2005 2.8 1.2 1.5 0.3 0.3 3.9 2.1 3.2 4.9 -4.1 1.2 1.2 19.7 2004 1.8 1.8Past performance is not indicative of future performance. Performance is provided net of fees.Source: GAM 51
  • 52. World Invest Absolute ReturnMonthly performance World Invest Absolute Return – C EUR % return Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD 2012 -0.5 2.4 2.5 0.9 -0.1 0.7 2.6 -0.1 0.6 1.2 10.6 2011 -3.2 -0.1 1.4 0.2 -0.6 2.4 0.1 -1.3 0.4 0.3 1.1 1.4 2.0 2010 0.8 1.4 2.0 0.3 -0.5 0.6 0.0 0.9 0.4 1.0 0.8 1.3 9.2 2009 0.9 0.8 -2.0 -1.9 -0.4 -0.3 -0.1 0.8 1.1 -0.3 0.9 0.8 0.3 2008 -2.4 1.3 -1.3 2.5 0.3 0.7 -3.4 0.0 -6.3 -0.7 -1.1 -0.7 -10.8 2007 2.3 -0.4 0.6 1.2 1.2 0.5 0.0 -1.4 1.6 0.6 -3.2 0.7 3.6 2006 3.9 1.6 1.7 1.6 -2.3 -0.7 -0.3 0.3 0.7 1.5 1.6 1.3 11.3 2005 2.2 2.3 -0.2 -0.9 1.9 2.4 2.6 1.6 2.3 -4.6 2.0 1.5 13.8 2004 3.1 1.6 -0.9 1.1 -0.5 0.5 0.3 0.1 1.0 -0.4 2.4 2.6 11.5 2003 -0.5 1.3 0.8 1.8 2.0 0.3 2.6 0.7 -0.3 9.0Past performance is not indicative of future performance. Performance is provided net of fees.Source: GAM 52
  • 53. GAM Talentum Emerging Long/ShortMonthly performance GAM Talentum Emerging Long/Short – A EUR % return Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD 2012 -1.6 3.0 4.2 3.9 -3.4 1.4 1.6 1.4 -0.8 2.8 13.0 2011 -3.9 -0.3 0.6 1.5 0.9 -0.2 1.6 0.6 -0.5 -0.7 0.6 0.6* 0.7 2010 -2.4 -1.0 2.8 -0.7 -2.7 0.9 0.4 1.3 2.2 2.6 1.1 0.8 5.4 2009 1.4 -0.1 -1.3 0.4 1.9 1.1 2.1 2.5 3.7 0.2 1.0 2.7 16.8 2008 0.3 4.4 -0.7 2.3 6.2 2.3 -4.6 -2.2 -0.2 1.5 0.0 -0.3 8.7 2007 -0.8 1.1 1.3 0.4 0.4 -0.1 -2.3 2.8 2.7 -0.1 1.8 7.4Past performance is not indicative of future performance. Performance is provided net of fees.Source: GAM. * Raised gross exposure range to 1.5x original targets. 53
  • 54. World Invest Absolute EmergingMonthly performance World Invest Absolute Emerging – C EUR % return Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD 2012 -1.2 1.9 2.7 2.6 -2.5 0.7 1.2 0.7 -0.7 1.7 7.3 2011 -4.0 -0.4 0.8 1.5 0.9 -0.3 1.5 0.5 -0.5 -0.7 0.4 0.6 0.2 2010 -1.4 -0.4 1.4 -0.6 -2.7 1.2 0.3 1.2 2.2 2.5 1.0 0.5 5.2 2009 0.3 2.1 2.2 2.4 -1.1 1.9 8.0Past performance is not indicative of future performance. Performance is provided net of fees.Source: GAM. 54
  • 55. GAM Talentum Europe Long/Short - A EURExposure history as at 31 Oct 2012 Exposure – Long and Short Exposure – Gross and NetSource: GAM 55Allocations and holdings are subject to change.
  • 56. GAM Talentum Enhanced Europe Long/ShortExposure history as at 31 Oct 2012 Exposure – Long and Short Exposure – Gross and NetSource: GAM 56Allocations and holdings are subject to change.
  • 57. World Invest Absolute ReturnExposure history as at 31 Oct 2012 Exposure – Long and Short Exposure – Gross and NetSource: GAM 57Allocations and holdings are subject to change.
  • 58. GAM Talentum Emerging Long/ShortExposure history as at 31 Oct 2012 Exposure – Long and Short Exposure – Gross and NetSource: GAM 58Allocations and holdings are subject to change.
  • 59. World Invest Absolute EmergingExposure history as at 31 Oct 2012 Exposure – Long and Short Exposure – Gross and NetSource: GAM 59Allocations and holdings are subject to change.
  • 60. Gianmarco Mondani Chief Investment Officer Gianmarco Mondani is the Chief Investment Officer of the non-directional equity team, and co- manages developed Europe long and long/short equity funds. In addition to his role as Chief Investment Officer, Gianmarco is the Chief Executive Officer as well as a Founding Partner of GAM Investment Management Lugano SA (formerly Arkos Capital SA). He joined GAM following its acquisition of the equity hedge specialist in July 2012. Prior to establishing Arkos in January 2007, Gianmarco launched and co-managed the current World Invest and Talentum offering at Banca Arner in Lugano. Before this, he was an assistant director and portfolio manager within the European investment team at Martin Currie Investment Management Limited in Edinburgh. Gianmarco holds an MA in Investment Analysis from Sterling University, United Kingdom, and a BA (cum laude) in Economics and Business Studies from Genoa University, Italy. He is based in Lugano, Switzerland. 60
  • 61. Roberto Cantaluppi Senior Fund Manager Roberto Cantaluppi is a Senior Fund Manager in the non-directional equity team, and co- manages developed Europe long and long/short equity and global financials long/short equity funds. He joined GAM following its acquisition of the equity hedge specialist, GAM Investment Management Lugano SA (formerly Arkos Capital SA), in July 2012. Prior to joining Arkos in August 2007, Roberto held several posts at Allianz Asset Management, including three years as head of the sector analyst team and eight years as fund manager at RAS Asset Management SGR (a wholly owned subsidiary of Allianz). Previously, he was an analyst for San Paolo IMI in Italy, and an analyst at Mediosim in Italy. Roberto holds an MA and a BA (cum laude) in Economics from Bocconi University, Italy, and a certificate from the Italian Association of Financial Analysts. He is based in Lugano, Switzerland. 61
  • 62. Paolo Longinotti Fund Manager Paolo Longinotti is a Fund Manager in the non-directional equity team, and co-manages developed Europe long and long/short equity funds. Paolo joined GAM following its acquisition of the equity hedge specialist, GAM Investment Management Lugano SA (formerly Arkos Capital SA), in July 2012. He joined Arkos in June 2011. Paolo began his career in finance in 1998 where he worked as an equity analyst and fund manager for Italian investment houses including Eurizon Capital SGR, Fidentiis Equities and Banca Generali. Paolo holds a BA in Economics and Business Administration from Università Cattolica del Sacro Cuore, Italy. He is based in Lugano, Switzerland. 62
  • 63. Enrico Camera Senior Fund Manager Enrico Camera is a Senior Fund Manager in the non-directional equity team, and co-manages emerging markets long/short equity funds. He joined GAM following its acquisition of the equity hedge specialist, GAM Investment Management Lugano SA (formerly Arkos Capital SA), in July 2012. Prior to joining Arkos in February 2007, Enrico was a fund manager at Banca Arner, and prior to this, was head of global emerging markets and a portfolio manager at Aureo Gestioni SGR. Before that he was at Epta Fund, Italy as part of the institutional client sales team. Enrico holds a BSc (cum laude) in Economics from Verona University, Italy, and is a CFA charterholder. He is based in Lugano, Switzerland. 63
  • 64. Iain Cartmill Fund Manager Iain Cartmill is a Fund Manager in the non-directional equity team, and co-manages emerging markets long/short equity funds. He joined GAM following its acquisition of the equity hedge specialist, GAM Investment Management Lugano SA (formerly Arkos Capital SA), in July 2012. Prior to joining Arkos in November 2007, Iain was a director at AIG private Bank in Zurich where he worked in equity research and portfolio management covering European and emerging market stocks. Prior to that, he was at a number of different investment banks based in London, including Deutsche Bank, Bankers Trust, Morgan Stanley and Robert Fleming. He began his career as an analyst at ANZ Banking Group in Australia. Iain holds a BA in Economics from the University of Queensland, Australia, a BBus (Hons) in Finance from Queensland University of Technology, Australia, and is a CFA charterholder. He is based in Lugano, Switzerland. 64
  • 65. Aldo Meroni Research Analyst Aldo Meroni is a Research Analyst in the non-directional equity team. He joined GAM following its acquisition of the equity hedge specialist, GAM Investment Management Lugano SA (formerly Arkos Capital SA), in July 2012. He focuses on researching emerging markets. Prior to joining Arkos in December 2011, Aldo was a quantitative equity analyst at CFO Sim S.p.A., a family office in Italy, where he created and developed a quantitative stock screening model. Aldo holds an MSc (cum laude) and a BSc (cum laude) in Finance from Bocconi University, Italy. He is based in Lugano, Switzerland. 65
  • 66. Nico Cacciabue Director Nico Cacciabue is a Director – Investments in the non-directional equity team. He joined GAM following its acquisition of the equity hedge specialist, GAM Investment Management Lugano SA (formerly Arkos Capital SA), in July 2012. He focuses on portfolio research and management across all strategies managed by the non-directional equity team, and is responsible for the communication of the investment process and portfolio positioning of these mandates. Prior to joining Arkos in April 2012, Nico worked as a distribution banker at Credit Suisse in both London and Zurich where he was responsible for the distribution of alternative investments to institutional clients in Europe. Before that, he was an investment analyst for four years for the World Invest and Talentum offerings since their inception at Banca Arner, and previously an investment analyst at two hedge fund companies based in London. Nico holds a Postgraduate Diploma in Investment Management from SDA Bocconi in Milan, an MSc in Business and Environmental Technology from Imperial College (University of London) and a BEng (first class honours) in Special Environmental Engineering from Brunel University (Erasmus Associate of the Politecnico di Milano). He is based in Lugano, Switzerland. 66
  • 67. GAM Investment Management Lugano SA Board of Directors External Auditor KPMG General Management Gianmarco Mondani (CEO/CIO) Tristan Brenner (COO) Risk Management Compliance Fabio Trancanelli Tristan Brenner Asset Management Product Support & Operations Gianmarco Mondani Tristan Brenner Roberto Cantaluppi Enrico Camera Jonathan Stanford Middle Office Paolo Longinotti (3) Iain Cartmill Davide Marchesin Aldo Meroni Execution Nico Cacciabue (2) HR, IT, Accounting Outsourced to GAM (Schweiz) AG & GAM (UK) LimitedSource: GAM as at 31 Oct 2012. 67
  • 68. Additional fund information Developed Europe Prime Brokers/ Custodians Administrator Auditor GAM Talentum Europe Long/Short Merrill Lynch, Morgan Stanley Citibank Europe PwC GAM Talentum Enhanced Europe Long/Short Merrill Lynch, Morgan Stanley Citibank Europe PwC World Invest Absolute Return SICAV State Street Bank Luxembourg State Street Bank Luxembourg Ernst & Young Emerging Markets GAM Talentum Emerging Long/Short Merrill Lynch, Morgan Stanley Citibank Europe PwC World Invest Absolute Emerging State Street Bank Luxembourg State Street Bank Luxembourg Ernst & Young Financials World Invest Absolute Financials SICAV State Street Bank Luxembourg State Street Bank Luxembourg Ernst & Young Convertibles World Invest Absolute Strategy SICAV State Street Bank Luxembourg State Street Bank Luxembourg Ernst & YoungSource: GAM 68
  • 69. History of the team 2002 Launch of Talentum Activedge – 2008 Launch of World Invest Absolute Strategy – European non-directional Hedge Fund Convertible Bonds Fund (UCITS) 2003 Launch of World Invest Absolute Return - European Equity L/S fund (UCITS) 2009 Launch of World Invest Absolute Emerging – Emerging Markets Equity L/S fund (UCITS) 2004 Launch of Talentum Enhanced – 2 times levered version of European non-directional Hedge Fund 2010 Launch of World Invest Absolute Financials – Global Financials Equity L/S fund (UCITS) 2007 Spin-off of fund management activities and incorporation of Arkos Capital SA. Launch of offshore Emerging Markets Equity L/S Hedge Fund 2012 Arkos Capital SA acquired by GAM Group AG* and in October became GAM Investment Management Lugano SA, with investment team and approach remaining unchangedFor your information, GAM Group AG, a wholly owned subsidiary of GAM Holding AG, completed the acquisition of 74.95% of GAM Investment Management Lugano SA on 31 July 2012 and closed 69agreements with the management of GAM IM Lugano for the future purchase of the remaining 25.05%.NOTE: Funds may not be registered for sale in all jurisdictions. This is not an invitation to invest in the named funds.
  • 70. GAM’s acquisition of Arkos Capital*Transaction benefits ● GAM and Arkos shared a unique cultural fit – GAM’s culture is based on allowing each investment team to follow its own investment philosophy and process, whilst applying strict risk management checks ● The funds continued to be managed by the same team and their approach remained unchanged ● The team are free from non-investment tasks and distractions, able to concentrate even more on alpha generation ● GAM’s broad investor base offers asset diversification and enhances the long-term stability of the business ● The long-term pay out structure ensures that the team will continue to be engaged with the same dedication and incentive as an actual shareholder for at least seven yearsSource: GAM 70* For your information, GAM Group AG, a wholly owned subsidiary of GAM Holding AG, completed the acquisition of 74.95% of GAM Investment Management Lugano SA on 31 July 2012 and closedagreements with the management of GAM IM Lugano SA for the future purchase of the remaining 25.05%.
  • 71. Disclaimer Source: GAM unless otherwise stated. (Unless otherwise noted, where shown, performance is shown net of fees, on a NAV-to-NAV basis). GAM Group AG, a wholly owned subsidiary of GAM Holding AG, is a majority shareholder of GAM Investment Management Lugano SA (formerly Arkos Capital SA). GAM has not independently verified the information from other sources and no assurance can be given as to whether such information is accurate, true or complete and GAM makes no warranty, expressed or implied, regarding such information. Whilst every effort has been made to ensure the accuracy of the financial information herein, you should note that some of the information may be based on unaudited or otherwise unverified information. This material is confidential and is intended solely for the use of the person or persons to whom it is given or sent and may not be reproduced, copied or given, in whole or in part, to any other person. It is aimed at sophisticated, professional, eligible, institutional and/or qualified investors who have the knowledge and financial sophistication to understand and bear the risks associated with the investments described herein. Nothing contained herein constitutes investment, legal, tax or other advice nor is it to be solely relied on in making an investment or other decision. It is not an invitation to subscribe and is by way of information only. This document may not be used as sales literature with members of the public. None of the shares or units (‘Shares’) of the products mentioned herein have been registered under the US Securities Act of 1933, as amended (the ‘Securities Act’), and none of the products are registered under the US Investment Company Act of 1940, as amended (the ‘Company Act’). Accordingly, unless an exemption is available such Shares may not be offered, sold or distributed in the US or to US persons. However, pursuant to an exemption from registration under the Securities Act and the Company Act, such Shares may be sold or resold in the United States or to certain qualified US investors in transactions that do not constitute a public offering. In addition, certain products may be closed to all US investors. Some of the products mentioned herein may not be registered for public sale in all jurisdictions. Therefore, no public marketing must be carried out for them. Shares in GAM products are not available for sale in any state or jurisdiction in which such sale would be prohibited and are not aimed at persons in those jurisdictions and in those cases where the law prohibits this type of information from being provided. Investors in such Shares will not be eligible for the specific investor protection given under the Swiss Collective Investment Schemes Act, the German Investment Act or the Austrian Collective Investments Schemes Act, in contrast to investors in products that are regulated under said acts. The funds mentioned herein are not authorized or registered for public sale in Asia Pacific. Therefore, no public marketing must be carried out for them in Asia Pacific. In Hong Kong, this material is restricted to professional investors (as defined in the Securities and Futures Ordinance (Cap 571)) only. In other countries in Asia Pacific, this material should only be distributed in accordance with the applicable laws in the relevant jurisdiction. Subscriptions to the Talentum funds mentioned herein will only be received and shares or units (‘Shares’) issued on the basis of the current prospectus for the funds. Talentum fund documents are available at: GAM Investment Management Lugano SA, Via Marconi 1, CH-6900 Lugano, Switzerland. The World Invest funds mentioned herein are sub-funds of a Luxembourg-based umbrella SICAV World Invest and are registered for sale in Germany, Italy, Luxembourg, Norway and Switzerland. Subscriptions will only be received and shares or units (‘Shares’) issued on the basis of the current prospectus for the fund. Copies of the fund’s prospectus, key investor information documents (KIID) and financial statements can be obtained free of charge from Casa4Funds SA, 41, Boulevard Royal, L-2449 Luxembourg and from its representative in Switzerland GAM Anlagefonds AG, Klausstrasse 10, CH-8034 Zurich. Paying Agent in Switzerland is State Street Bank GmbH, Zurich Branch, Beethovenstrasse 19, CH-8027 Zurich. Shares are not available for sale in any state or jurisdiction in which such sale would be prohibited. In Japan, the products mentioned herein shall not be disclosed publicly pursuant to the Financial Instruments and Exchange Law (the ‘FIEL’) nor registered for public sale or private placement pursuant to the Law on Investment Trusts and Investment Companies. Therefore, none of the Shares of the products may be solicited in Japan or to residents in Japan. This material is intended for circulation to professional, institutional and/or qualified investors only. Any person in receipt of this material is not allowed to distribute it to residents in Japan nor communicate to residents in Japan about the products mentioned herein. 71
  • 72. Disclaimer The views expressed herein are those of the manager at the time and are subject to changes. The price of Shares may go down as well as up and the price will depend on fluctuations in financial markets outside GAM’s control, as a result an investor may not get back the amount invested. Past performance is not indicative of future performance. References to any security or company are not a recommendation to buy or sell any security and are for information purposes only. Prices quoted refer to accumulation Shares unless otherwise stated. Historic data may be subject to restatement from time to time. Holdings and allocations are subject to change. Typical portfolio characteristics and target objectives are subject to change. The objectives are based on certain assumptions (including, among other things, objectives of underlying funds and strategies, and historic performance) and market, economic and other conditions that may change and have a material impact on future results. Thus, there can be no assurance that these objectives will be realised. Objectives set over an investing cycle. Investment objectives do not represent a prediction of returns, volatility or a promise to deliver any particular investment goal. Actual performance and volatility may be greater or less than these objectives. Investment and performance objectives are subject to change. There is no guarantee that forecasts will be realised. Where funds are mentioned, complete fund information is contained in the relevant prospectus or scheme particulars. Copies of the funds’ prospectuses, scheme particulars, financial statements and constitutional documents can be obtained free of charge from GAM upon request in the UK, from GAM Fund Management Limited, George’s Court, 54–62 Townsend Street, Dublin 2, Ireland. Important information about hedge funds: Hedge fund strategies are speculative and are not suitable for all investors. GAM hedge fund products are only available to investors who are comfortable with the substantial risks associated with investing in hedge funds. An investment in hedge fund strategies includes the risks inherent in an investment in securities, as well as specific risks associated with limited liquidity, the use of leverage, short sales, options, futures, derivative instruments, investment in overseas securities, ‘junk’ bonds and illiquid investments. Investors should recognise that they will bear asset-based fees and expenses at the fund of hedge fund level, and indirectly, fees, expenses and performance-based compensation of the investment funds in which these funds of hedge funds invest. Hedge fund strategies may be leveraged and the volatility of the price of their interests may be great. The investment funds in which the fund of hedge fund strategies invest can be highly illiquid, are not required to provide periodic reporting or valuation information to investors and may involve complex tax strategies. The use of leverage may cause an underlying portfolio to liquidate positions when it may not be advantageous to do so in order to satisfy its obligations or to meet segregation requirements. Leverage, including borrowing, may cause an underlying portfolio to be more volatile than if the underlying portfolio had not been leveraged. Communication of gross only performance figures must be on a one-on-one basis, private and of a confidential nature. They may not be disseminated to the public in any print, electronic or other medium, to include a web-site or any database of general circulation. The following disclosures must be provided in writing when communicating gross only performance figures: (i) performance figures do not reflect the deduction of investment advisory fees; (ii) returns will be reduced by investment advisory fees and any other expenses that may be incurred in the management of an account; (iii) the investment advisory fees are described in the prospectus for the fund; and (iv) a representative example that shows the effect an investment advisory fee, compounded over a period of years, could have on the total value of a client’s portfolio. As an example of the effect of investment advisory fees on the total value of an account, a three year compound return of 8.83% before the deduction of investment advisory fees would be 7.74% after deduction of investment advisory fees of 1.00% accrued monthly and payable quarterly. In the United Kingdom, this material has been issued and approved by GAM London Limited, 12 St James’s Place, London SW1A 1NX, authorised and regulated by the Financial Services Authority. The funds mentioned herein are not regulated under the Financial Services and Markets Act 2000, consequently no protection is provided by the UK regulatory system. Moreover benefits available under the UK Financial Services Compensation Scheme do not apply. In Switzerland, this material has been issued and approved by GAM Anlagefonds AG, Klausstrasse 10, CH-8034 Zurich. 72