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A part of the FirstRand Group
RMB Global Markets Fund Solutions
Brought to you by Ashburton Investments
Ashburton Investments – giving investors access to more
2
 Ashburton Investments is the FirstRand
Group’s investment mana...
GLOBAL MARKETS
February 2014
GLOBAL MARKETS
Fund Solutions
GLOBAL MARKETS
Fund Solutions
GLOBAL MARKETS
Fund Solutions
Emi...
Strictly Private and Confidential
Retail and commercial
banking
Corporate and
investment banking
Instalment
finance
Invest...
Strictly Private and Confidential
RMB non-traditional investment solutions include a combination of the following:
Overvie...
Strictly Private and Confidential
Conservative range
RMB Cash Enhancer
RMB Structured Plus 100
RMB Inflation-X ETF
RMB Pro...
RMB boutique products 7
Strictly Private and Confidential
RMB Cash Enhancer
RMB Dynamic Yield Series
RMB Cash Enhancer
Performance linked investme...
Strictly Private and Confidential
Indicator Details
Target market Private investors seeking above average returns
Product ...
Strictly Private and Confidential
Credit portfolio exposure (top 10)
Growthpoint Properties Ltd.
Emira Property
BMW Financ...
Strictly Private and Confidential
RMB Cash Enhancer (cont.)
Monthly performance versus benchmark1
Source: RMB
Note 1. Retu...
Strictly Private and Confidential
RMB Structured Plus 100
RMB Multiple Asset Series
RMB Structured Plus 100
Performance li...
Strictly Private and Confidential
Indicator Details
Target market Private investors seeking low volatility real returns
Pr...
Strictly Private and Confidential
80
100
120
140
160
180
200
220
240
260
280
Dec-04 Nov-05 Oct-06 Aug-07 Jul-08 May-09 Apr...
Strictly Private and Confidential
RMB Structured Plus 90
RMB Multiple Asset Series
RMB Structured Plus 90
Performance link...
Strictly Private and Confidential
RMB Structured Plus 90 (cont.)
Indicator Details
Target market Private investors seeking...
Strictly Private and Confidential
75
100
125
150
175
200
225
250
275
300
325
Dec-04 Nov-05 Oct-06 Aug-07 Jul-08 May-09 Apr...
Strictly Private and Confidential
RMB Protected Flexible 80
RMB Multiple Asset Series
RMB Protected Flexible 80
Performanc...
Strictly Private and Confidential
Indicator Details
Target market Private investors seeking high exposure to equities and ...
Strictly Private and Confidential
Strategic asset allocation
• 60% top40 Index
• 40% growth hedge
• 0% Cash
RMB Protected ...
Strictly Private and Confidential
Product performance summary
Source: RMB, Bloomberg
Note 1. Simulated returns, net of man...
Strictly Private and Confidential
Product performance summary
Source: RMB, Bloomberg
Note 1. Simulated returns, net of man...
GLOBAL MARKETS
February 2014
GLOBAL MARKETS
Fund Solutions
GLOBAL MARKETS
Fund Solutions
GLOBAL MARKETS
Fund Solutions
RMB...
Strictly Private and Confidential
RMB Bespoke Series
Performance linked investment account
24
RMB Bespoke
24
24
Strictly Private and Confidential 25
RMB Bespoke (continued)
All in one multi-purpose, multi-asset class portfolio
• ZAR f...
Strictly Private and Confidential 26
The South African mystery
3
Question: Would you consider gearing into a growth invest...
Strictly Private and Confidential
RMB Bespoke (continued)
27
Gearing offering
Limited to approved Growth assets with low v...
Strictly Private and Confidential 28
RMB Bespoke (continued.)
Guarantees
Various reference assets can be guaranteed
• Inde...
Strictly Private and Confidential
Liquidity Enhancer on guaranteed products
Issue Details
Term Same term as the guaranteed...
Strictly Private and Confidential 30
RMB Bespoke summary
FSR credit
Innovative
Flexible
Bespoke
Cost
efficient
Tax
Transpa...
Strictly Private and Confidential
RMB Global Markets Fund SolutionsRMB Protected Equity
RMB Single Asset Series
RMB Protec...
Strictly Private and Confidential
RMB Protected Equity: terminology
Term Description
Term The time to the contractual matu...
Strictly Private and Confidential
RMB Protected Equity: building blocks
Building blocks
Term, cap, participation and guara...
Strictly Private and Confidential
Underlying asset choices
An Equity Linked Note (ELN) is an investment where the return i...
Strictly Private and Confidential
RMB Protected Equity ― uncapped participation, 5 year example
Investor’s view that the m...
Strictly Private and Confidential
RMB Protected Equity ― guarantee vs. participation
Investor’s view that the market is go...
Strictly Private and Confidential
RMB Protected Equity ― capped version, 3 year example
Investor’s view that the market is...
Strictly Private and Confidential
RMB Protected Equity ― guarantee vs. cap
Investor’s view that the market is going to inc...
Strictly Private and Confidential
RMB Protected Equity: summary
Capital protection plus potential equity upside
100% capit...
Strictly Private and Confidential
RMB Protected Equity: 100/110 Geared Equity
Capital protection plus potential geared equ...
Strictly Private and Confidential
• Cap of 110% is sensible —Top40 returned lower than10% less than 10 times in 14 years
•...
Strictly Private and Confidential
RMB Protected Equity: 100/110 Geared Equity example
Example
Investment term 5 years
Inve...
RMB Fusion funds 43
Strictly Private and Confidential
Passive trends globally
Global ETP assets and number of ETPs by year• Accurate proxy for...
Strictly Private and Confidential
Passive vs active strategies
Percentage of actively managed general equity unit trusts t...
Strictly Private and Confidential
Passive — what the experts are saying
• New legislation in the South African savings ind...
Strictly Private and Confidential
Delivery mechanisms
e.g. Top40 index
ETFs Unit trusts
• Caters for real-time dealing
• F...
Strictly Private and Confidential
Index tracking analysis — TER and tracking error comparison vs competitors• Well establi...
Strictly Private and Confidential
RMB Fusion Series Portfolios Return expectation (p.a.) Term
RMB Cautious Fusion Fund Low...
Strictly Private and Confidential
Asset
class
Description
RMB Cautious Fusion
Fund
RMB Moderate Fusion
Fund
RMB Growth Fus...
Strictly Private and Confidential
RMB Fusion Series — summary
Inflation-linked
performance benchmarks
Three risk profiled ...
RMB Exchange Traded Funds (ETFs) 52
Strictly Private and Confidential
InflationX vs CPI
90
110
130
150
170
190
210
230
250
270
290
310
Feb-04
Aug-04
Feb-05
Au...
Strictly Private and Confidential 54
2. RMB Top40 ETF
• Tracks index of SA’s 40 largest and most liquid shares
• 0.1% mana...
Strictly Private and Confidential 55
3. RMB MidCap ETF
• Tracks index of 60 of SA’s midcap stocks which are the next
bigge...
Strictly Private and Confidential
FNB Share Saver
• Share Saver gives you access to the Top 100 shares listed on the JSE b...
Strictly Private and Confidential
57
57
Strictly Private and Confidential
Strictly Private & Confidential
This presentation has been prepared by FirstRand Bank Li...
A part of the FirstRand Group
2014/07/07
Client Name (change in footer)
59
THANK YOU
For more information please visit
www...
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Ashburton Investments rmb

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Transcript of "Ashburton Investments rmb"

  1. 1. A part of the FirstRand Group RMB Global Markets Fund Solutions Brought to you by Ashburton Investments
  2. 2. Ashburton Investments – giving investors access to more 2  Ashburton Investments is the FirstRand Group’s investment management business  Brings together the investment capabilities of RMB and Ashburton to create a new and innovative investment proposition  Unique ability to leverage the skills, platforms and product origination capabilities within the FirstRand Group enables us to give investors access to an investment universe not previously available to them  Over R115 billion* in assets under management *As at June 2014 FirstRand Group About Ashburton Investments A new generation investment manager Our view Financial markets Portfolio management Solutions Access Listed instruments: equities, cash, bonds Unlisted instruments: Real economy origination Single managers Multi managers Segregated portfolios Alternatives Passives Guaranteed products Multiple investment styles Risk profiles Institutions Individual investors Broad retail market + + + + A view Asset and liability solutions
  3. 3. GLOBAL MARKETS February 2014 GLOBAL MARKETS Fund Solutions GLOBAL MARKETS Fund Solutions GLOBAL MARKETS Fund Solutions Emile Linde emile.linde@rmb.co.za │ June 2014
  4. 4. Strictly Private and Confidential Retail and commercial banking Corporate and investment banking Instalment finance Investment management FirstRand Bank Limited FirstRand Investment Management Overview — organisational structure 4 • RMB provides guaranteed, alternative and passive solutions to private and professional investors • RMB provides investment solutions to IFAs / private investors via Ashburton Investments
  5. 5. Strictly Private and Confidential RMB non-traditional investment solutions include a combination of the following: Overview — GMFS summary Out-of-the-ordinary (alternative) assets • Not equities, bonds or cash • Low correlation to traditional asset classes • Improved risk adjusted returns • Relaxation of regulation 28 of the Pension Funds Act Mirror of market performance (passive / rules-based / Beta) • Mainly derived from mathematical equations • Include ETFs, ETNs, CISs, etc. Downside risk protection • Applied to many of our investment strategies • Risk reduction compounds positively over time • Can be overlaid within a solution 5 5 RMB boutique products RMB customised solutions RMB Fusion funds RMB ETFs 5
  6. 6. Strictly Private and Confidential Conservative range RMB Cash Enhancer RMB Structured Plus 100 RMB Inflation-X ETF RMB Protected Equity RMB Cautious Fusion Fund Balanced range RMB Structured Plus 90 RMB Protected Flexible 80 RMB Protected Equity RMB Moderate Fusion Fund Growth range RMB Top40 ETF RMB MidCap ETF RMB Select RMB Protected Equity RMB Growth Fusion Fund Aggressive range Customised solutions (e.g. RMB Bespoke) Overview — RMB investment range by client risk profile Conservative Balanced Growth Aggressivegrowth Potentialreturn Risk 6 66
  7. 7. RMB boutique products 7
  8. 8. Strictly Private and Confidential RMB Cash Enhancer RMB Dynamic Yield Series RMB Cash Enhancer Performance linked investment account 8
  9. 9. Strictly Private and Confidential Indicator Details Target market Private investors seeking above average returns Product structure • Combine FSR cash deposits and investment grade corporate credit • Invest alongside FSR’s own high quality corporate credit portfolio • 60-75% FSR cash deposits, 25-40% corporate credit • Client earns the rate pick-up from the corporate credit portfolio • Returns accrue daily and are capitalised quarterly Guarantee None Liquidity • Weekly investment dates • 45 calendar days’ notice Investment horizon > One year Benchmark The average large Money Market Collective Investment Scheme (MM CIS) Minimum investment R1 000 000 Fees (excl. VAT) TER: 0.15% Reporting Top ten credit holdings available monthly, full list available on request RMB Cash Enhancer (cont.) 99
  10. 10. Strictly Private and Confidential Credit portfolio exposure (top 10) Growthpoint Properties Ltd. Emira Property BMW Financial Services RSA (Pty) Ltd. Tongaat-Hulett Ltd. Mercedes-Benz RSA (Pty) Ltd. Transnet Ltd. Engen Ltd. Steinhoff International Holdings Ltd. Pick ‘n Pay Retailers (Pty) Ltd. Discovery Holdings Ltd. High quality credit assets strictly limited by a mandate: The credit assets must also comply with the following: • Investment grade only: - Listed companies or metros - Government guaranteed exposure / parastatals - Subsidiaries/branches of multinational companies • Maximum average duration of portfolio of 3 years • Only local currency exposures • No geared exposure • Originated via the FirstRand Credit Process • Originated by a division of FirstRand Bank • Credit counterpart is a client of FirstRand Bank • FirstRand Bank is similarly invested into the credit counterparty RMB Cash Enhancer (cont.) 10 10
  11. 11. Strictly Private and Confidential RMB Cash Enhancer (cont.) Monthly performance versus benchmark1 Source: RMB Note 1. Returns are net of fees 11 11 4.50% 5.00% 5.50% 6.00% 6.50% May-11 Nov-11 May-12 Nov-12 May-13 Nov-13 May-14 Cash Enhancer Benchmark 11
  12. 12. Strictly Private and Confidential RMB Structured Plus 100 RMB Multiple Asset Series RMB Structured Plus 100 Performance linked investment account 1212
  13. 13. Strictly Private and Confidential Indicator Details Target market Private investors seeking low volatility real returns Product structure • Broadly diversified local asset mix • Absolute return fund with explicit guarantee • Only absolute return fund managed by a bank Guarantee 100% explicit 12-month rolling FSR capital guarantee Liquidity • Annual liquidity • 1 calendar month notice • No monthly distribution Investment horizon > One year Benchmark CPI + 2% Minimum investment R250 000 Fees (excl. VAT) • Advice fee: 0.50% • Management fee: 0.50% • Performance fee: 25% of outperformance above benchmark Reporting Monthly performance and holdings available RMB Structured Plus 100 13 13
  14. 14. Strictly Private and Confidential 80 100 120 140 160 180 200 220 240 260 280 Dec-04 Nov-05 Oct-06 Aug-07 Jul-08 May-09 Apr-10 Feb-11 Jan-12 Nov-12 Oct-13 SP 100 CPI plus 2% RMB Structured Plus 100 (cont.) Strategic asset allocation • 35% defensive hedge • 20% growth hedge • 30% secure growth 100 • 15% cash or equivalent Source: RMB, Stats SA Note 1. Simulated returns, net of management fees, gross of performance fee Performance vs CPI + 2%1 14 14
  15. 15. Strictly Private and Confidential RMB Structured Plus 90 RMB Multiple Asset Series RMB Structured Plus 90 Performance linked investment account 15
  16. 16. Strictly Private and Confidential RMB Structured Plus 90 (cont.) Indicator Details Target market Private investors seeking low volatility real returns Product structure • Broadly diversified local asset mix • Absolute return fund with explicit guarantee • Only absolute return fund managed by a bank Guarantee 90% explicit 12-month rolling FSR capital guarantee Liquidity • Annual liquidity • 1 calendar month notice • No monthly distribution Investment horizon > One year Benchmark CPI + 3.5% Minimum investment R250 000 Fees (excluding VAT) • Advice fee: 0.50% • Management fee: 0.50% • Performance fee: 25% of outperformance above the benchmark Reporting Monthly performance and holdings available 16 16
  17. 17. Strictly Private and Confidential 75 100 125 150 175 200 225 250 275 300 325 Dec-04 Nov-05 Oct-06 Aug-07 Jul-08 May-09 Apr-10 Feb-11 Jan-12 Nov-12 Oct-13 SP 90 CPI plus 3.5% RMB Structured Plus 90 (cont.) Performance vs CPI + 3.5% Source: RMB, Stats SA Note 1. Simulated returns, net of management fees, gross of performance fee Strategic asset allocation • 30% defensive hedge • 30% growth hedge • 35% secure growth 95 • 5% cash or equivalent 17
  18. 18. Strictly Private and Confidential RMB Protected Flexible 80 RMB Multiple Asset Series RMB Protected Flexible 80 Performance linked investment account 18
  19. 19. Strictly Private and Confidential Indicator Details Target market Private investors seeking high exposure to equities and alternative assets with a level of guarantee Product structure • Formulaic allocation between asset classes according to market conditions • Asset allocation managed daily to maximise returns (and for guarantee purposes) Guarantee Explicit FSR guarantee of 80% of the highest month-end value achieved Liquidity and interest • 1 calendar month notice • No monthly distribution • Total return paid out on redemption Investment horizon > One year Benchmark CPI + 5% Minimum investment R250 000 Fees (excluding VAT) • Advice fee: 0.50% • Management fee: 1.25% Reporting Monthly performance and holdings available RMB Protected Flexible 80 (cont.) 19 19
  20. 20. Strictly Private and Confidential Strategic asset allocation • 60% top40 Index • 40% growth hedge • 0% Cash RMB Protected Flexible 80 (cont.) Historical performance vs Top40 tracker Source: RMB, Bloomberg Note 1. Simulated returns, net of management fees 20 80 130 180 230 280 330 380 Dec-05 Aug-06 Apr-07 Dec-07 Aug-08 Apr-09 Dec-09 Aug-10 Apr-11 Nov-11 Jul-12 Mar-13 Nov-13 RMB Protected Flexible 80 TOP40 Tracker 80% Guarantee 20
  21. 21. Strictly Private and Confidential Product performance summary Source: RMB, Bloomberg Note 1. Simulated returns, net of management fees 21 80 100 120 140 160 180 200 220 240 260 280 300 320 340 360 Dec-05 Aug-06 Apr-07 Dec-07 Aug-08 Apr-09 Dec-09 Aug-10 Apr-11 Nov-11 Jul-12 Mar-13 Nov-13 RMB Structured Plus 100 TOP40 Tracker RMB Structured Plus 90 Cash (Month NCD) RMB Protected Flexible 80 21
  22. 22. Strictly Private and Confidential Product performance summary Source: RMB, Bloomberg Note 1. Simulated returns, net of management fees 22 22 -40% -20% 0% 20% 40% 60% 80% 100% Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 RMB Structured Plus 100 TOP40 Tracker RMB Structured Plus 90 Cash (3 month NCD) RMB Protected Flexible 80
  23. 23. GLOBAL MARKETS February 2014 GLOBAL MARKETS Fund Solutions GLOBAL MARKETS Fund Solutions GLOBAL MARKETS Fund Solutions RMB customised solutions 23
  24. 24. Strictly Private and Confidential RMB Bespoke Series Performance linked investment account 24 RMB Bespoke 24 24
  25. 25. Strictly Private and Confidential 25 RMB Bespoke (continued) All in one multi-purpose, multi-asset class portfolio • ZAR financial assets only Listed equity (Top 100) Exchange Traded Funds (ETFs) Hedge funds and fund of funds Collective Investment Schemes (House View portfolios) RMB Structured Products • Cost 0.65% p.a. 27 25
  26. 26. Strictly Private and Confidential 26 The South African mystery 3 Question: Would you consider gearing into a growth investment? Answer: Average South African will say that is too high risk. The mystery: Growth assets have the highest probability of outperforming the cost of funding over time. Low Volatility Growth Assets 26
  27. 27. Strictly Private and Confidential RMB Bespoke (continued) 27 Gearing offering Limited to approved Growth assets with low volatility strategies • Assets only available through the Balance Sheet Responsible gearing • Ranges from 0.1x to 1x • Non recourse • Risk management via Constant Proportion Portfolio Insurance (CPPI) • Currently prime interest rate linked
  28. 28. Strictly Private and Confidential 28 RMB Bespoke (continued.) Guarantees Various reference assets can be guaranteed • Independent Solutions • Dependent on risk (liquidity, volatility, correlation etc.) Cost effective • 0.60% p.a. ‘pay-as-you-go’ Flexibility • Lock-in returns by resetting guarantee • Remove guarantee (no penalties) Features • 5 year term • Typically 100% allocation to risky reference asset at inception 27 28
  29. 29. Strictly Private and Confidential Liquidity Enhancer on guaranteed products Issue Details Term Same term as the guaranteed product (minimum of 1-year) Loan value 85% of Present Value of guarantee Loan size Minimum of R500 000 Interest rate Prime - 1% Cash flows • One cash flow per month (not a transactional account) • Full application amount paid out Turnaround time Approximately 5 working days Benefit Best of both worlds i.e. explicit guarantee plus liquidity No redemption i.e. maintain exposure to growth assets 29 29
  30. 30. Strictly Private and Confidential 30 RMB Bespoke summary FSR credit Innovative Flexible Bespoke Cost efficient Tax Transparent Any SA tradable financial asset can be linked to the RMB Structured Note! Evolution of the financial advice industry 33 30
  31. 31. Strictly Private and Confidential RMB Global Markets Fund SolutionsRMB Protected Equity RMB Single Asset Series RMB Protected Equity Performance linked investment account 31
  32. 32. Strictly Private and Confidential RMB Protected Equity: terminology Term Description Term The time to the contractual maturity of the product Cap A ceiling of the potential return Participation A percentage of participation to the performance of the underlying asset Guarantee A percentage (generally around 100%) of the initial investment that is guaranteed at maturity Strike The price from which the investor participates in the upside of the underlying asset Average out At maturity the average value over a predefined period is used to protect against sudden downturn 32 32
  33. 33. Strictly Private and Confidential RMB Protected Equity: building blocks Building blocks Term, cap, participation and guarantee can be customised on certain products Explicit FirstRand Bank Limited capital guarantee All product payoffs are defined at maturity 1-, 3- or 5-year investment term 48-hour liquidity at market rates All products are accessed directly via FirstRand Bank acting through it Rand Merchant Bank Division 33 33
  34. 34. Strictly Private and Confidential Underlying asset choices An Equity Linked Note (ELN) is an investment where the return is linked to the performance of an underlying asset Indices Unit trusts Single stocks ETFs Top40 Top40 stocks (liquidity dependent) Top40 Index Unit trusts subject to RMB approval MidCap Equity Linked Note 34 34
  35. 35. Strictly Private and Confidential RMB Protected Equity ― uncapped participation, 5 year example Investor’s view that the market is going to increase • 100% capital guarantee after 5 years • 105% equity participation to Top40 index • Monthly average out over last 12 months Profit Loss Market return Participation to Top40 Top40 35 35
  36. 36. Strictly Private and Confidential RMB Protected Equity ― guarantee vs. participation Investor’s view that the market is going to increase • Increase in guarantee = decrease in participation Profit Loss Market return 36 36 Participation to Top40 Top40
  37. 37. Strictly Private and Confidential RMB Protected Equity ― capped version, 3 year example Investor’s view that the market is going to increase • 100% capital guarantee after 3 years • 175% capped return for Top40 index • Monthly average out over last 6 months Profit Loss Market return 37 37 Capped Return Top40
  38. 38. Strictly Private and Confidential RMB Protected Equity ― guarantee vs. cap Investor’s view that the market is going to increase • Increase in guarantee = decrease in cap Profit Loss Market return Capped return Top 40 38 38
  39. 39. Strictly Private and Confidential RMB Protected Equity: summary Capital protection plus potential equity upside 100% capital guarantee after 1, 3 or 5 years depending on the term 1. Equity upside capped: 100% participation up to a max % (the Cap) 2. Equity upside participation: quoted as % participation, but uncapped Term, participation and cap can be customised subject to RMB’s approval Average-out applicable, minimum deal size R250 000 39 39
  40. 40. Strictly Private and Confidential RMB Protected Equity: 100/110 Geared Equity Capital protection plus potential geared equity return 100% capital guarantee after 5 years Positive equity return capped at 110% Payout at maturity: {Investment amount × positive equity return × participation % (subject to the cap)} + 100% capital guarantee at maturity Average-out applicable, minimum deal size R250 000 40 40
  41. 41. Strictly Private and Confidential • Cap of 110% is sensible —Top40 returned lower than10% less than 10 times in 14 years • Very high probability that the investor will make a good return on this product RMB Protected Equity: 100/110 Geared Equity 41 Note 1. Historic returns are not a guarantee of future performance Top40 historic 5-year rolling returns Number of observations at each return Top40 historic rolling 5 year returns Less than 10 historic observations based on 5-year rolling historic returns from 2000 to 2014 were less than 10% 41
  42. 42. Strictly Private and Confidential RMB Protected Equity: 100/110 Geared Equity example Example Investment term 5 years Investment amount R1million (for illustrative purposes) Capital guarantee 100% of Investment amount applicable at maturity Underlying JSE Top40 Index (Bloomberg Code: Top40 Index) Cap 110% of underlying equity price Participation 550% of underlying equity price Scenario 3 Market returns 20% after 5 years Return R1,550,000 {R1m + R1m × 550% × 10%} Per annum return 9.16% Scenario 4 Market returns -10% after 5 years Return R1,000,000 {R1m + R1m × 550% × 0%} Per annum return 0% Scenario 1 Market returns 10% after 5 years Return R1,550,000 {R1m + R1m × 550% × 10%} Per annum return 9.16% Scenario 2 Market returns 5% after 5 years Return R1,275,000 {R1m + R1m × 550% × 5%} Per annum return 4.98% 42 42
  43. 43. RMB Fusion funds 43
  44. 44. Strictly Private and Confidential Passive trends globally Global ETP assets and number of ETPs by year• Accurate proxy for passive investing globally • Global AUM US$2.2 trillion = US$2.200 000 000 000! 5 000 4 000 3 000 2 000 1 000 0 # of ETPs 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Sep-13 $2,200 $2,000 $1,800 $1,600 $1,200 $1,400 $1,000 $800 $600 $400 $200 $0 Assets($bn) 2.2261.944 1.5251.4831.156 772851 598 428 31921814610979 106 219 297 300 357 524 883 1541 2220 2694 2543 4311 4759 4937 Source: Blackrock report, September 2013 Number of funds Assets under management 44
  45. 45. Strictly Private and Confidential Passive vs active strategies Percentage of actively managed general equity unit trusts that outperformed the FTSE/JSE All Share Index1 Source: Fundsdata.co.za Note 1. Data based on Total Return after fees, fund performances versus the total return performance of FTSE/JSE All Share Index for period ending 31 Dec 2013 • Majority of SA active managers do not outperform the market • Becomes harder to outperform the longer the term 1-year 2-years 3-years 5-years 7-years 10-years 20-years 39.5% 26.4% 30.1% 15.3% 22.9% 24.1% 20.0% 0.0% 25.0% 35.0% 45.0% 5.0% 10.0% 15.0% 20.0% 30.0% 40.0% 45
  46. 46. Strictly Private and Confidential Passive — what the experts are saying • New legislation in the South African savings industry is coming into effect • Local National Treasury is prompting structural changes by prescribing that “Low cost passive based product will form the basis of compulsory savings going forward” 46
  47. 47. Strictly Private and Confidential Delivery mechanisms e.g. Top40 index ETFs Unit trusts • Caters for real-time dealing • For DIY clients trading via the JSE • Caters for daily dealing • Aimed at the traditional savings market • Ideal for being sold via LISPs and advice channels Passive vs active investing — ETFs vs unit trusts • ETFs were traditionally the only entry to passive products in SA • ETFs can only be purchased via a stockbroker who charges fees • ETFs typically offer single asset class investing But… Segregated portfolios • Caters for institutional clients • Can be created for bespoke needs • Large minimum investment 47
  48. 48. Strictly Private and Confidential Index tracking analysis — TER and tracking error comparison vs competitors• Well established reputation • Proven track record in many asset classes • RMB Inflation-X voted best Bond Fund in SA in 2013 by Morningstar — across all funds • RMB offers the only Midcap ETF in SA (tracking error of 0.12%) Why RMB passive? 23.00% 22.50% 22.00% 21.50% 21.00% 20.50% 20.00% RMB Top 40 Portfolio Competitor 1 Competitor 2 Competitor 3 Competitor 4 Competitor 5 Competitor 6 Competitor 7 Tracking Efficiency 0.15% 0.23% 0.10% 0.25% 0.43% 0.38% 0.45% 0.40% TER 0.20% 0.45% 0.60% 0.48% 0.59% 0.72% 0.70% 1.14% Performance 22.42% 22.09% 22.07% 22.04% 21.75% 21.67% 21.62% 21.23% Source: Fundsdata.co.za 48
  49. 49. Strictly Private and Confidential RMB Fusion Series Portfolios Return expectation (p.a.) Term RMB Cautious Fusion Fund Low equity CPI + 2% Rolling 3-years RMB Moderate Fusion Fund Medium equity CPI + 3.5% Rolling 5-years RMB Growth Fusion Fund High equity CPI + 5% Rolling 7-years RMB Fusion Series — portfolios, return expectations and terms 4949
  50. 50. Strictly Private and Confidential Asset class Description RMB Cautious Fusion Fund RMB Moderate Fusion Fund RMB Growth Fusion Fund SA equity RMB Top 60 Capped Index 25% (within 5%) 40% (within 5%) 55% (within 5%) SA bonds Government Nominal Bond issuance weighted 33% (within 5%) 22% (within 5%) 11% (within 3%) SA property The FTSE/JSE SA Property Listed Index 10% (within 2.5%) 10% (within 2.5%) 10% (within 2.5%) SA cash Overnight cash 10% (within 2.5%) 7.5% (within 2%) 5% (within 1.5%) SA ILB Government Inflation- linked Bonds issuance weighted 12% (within 3%) 8% (within 2%) 4% (within 1%) Global equity MSCI World Index 0% (within 3%) 5% (within 1.5%) 10% (within 2.5%) Global bonds The Citigroup World Government Bond Index 10% (within 2.5%) 7.5% (within 2%) 5% (within 1.5%) Total 100% 100% 100% RMB Fusion Series — range of unit trusts 5050
  51. 51. Strictly Private and Confidential RMB Fusion Series — summary Inflation-linked performance benchmarks Three risk profiled funds with different investment horizons These funds in the true definition of fusion, combine the best of passive, with an active overlay 51
  52. 52. RMB Exchange Traded Funds (ETFs) 52
  53. 53. Strictly Private and Confidential InflationX vs CPI 90 110 130 150 170 190 210 230 250 270 290 310 Feb-04 Aug-04 Feb-05 Aug-05 Feb-06 Aug-06 Feb-07 Aug-07 Feb-08 Aug-08 Feb-09 Aug-09 Feb-10 Aug-10 Feb-11 Aug-11 Feb-12 Aug-12 Feb-13 Aug-13 CPI InflationX 53 • Tracks index of SA’s nine largest Government Issued inflation-linked bonds • Fund was voted Best Bond Fund in SA 2013 by Morningstar • Funds pay distribution four times per year. The CPI portion of the fund is rolled up into the asset price • 0.36% management fee (equates to a fund TER of 43bps) Performance1 RMB Inflation-X ETF 3-month -2.72% 6-month -2.17% 12-month -3.21% 3-year 8.91% 1. RMB Inflation-X ETF RMB Inflation-X ETF vs CPI1 Financial ratios1 Real yield going forward (over CPI) 2.2%pa 12-month historical distribution yield 2.4%pa Note 1. Data for end January 2014 CPI Inflation-X 53
  54. 54. Strictly Private and Confidential 54 2. RMB Top40 ETF • Tracks index of SA’s 40 largest and most liquid shares • 0.1% management fee (equates to a fund TER of 21bps) Performance1 RMB Top40 ETF 3-month -0.06% 6-month 11.73% 12-month 15.46% 3-year (annualised) 16.06% RMB top 10 sectors1 Note 1. Data for end January 2014 Financial ratios1 PE ratio 19.79 12-month historical distribution yield 2.46%pa Mining 24.93% Personal goods 10.38% Beverages 9.8% Media 8.88% Mobile Telecomms 7.84% Banks 6.81% Oil & Gas Producers 5.84% Life Insurance 5.2% Tobacco 3.25% General Industrials 1.79% 54
  55. 55. Strictly Private and Confidential 55 3. RMB MidCap ETF • Tracks index of 60 of SA’s midcap stocks which are the next biggest outside of the Top 40 • 0.5% management fee (equates to a fund TER of 86bps) RMB top 10 holdings1 Note 1. Data for end January 2014 Financial ratios PE ratio 16.39 12-month historical distribution yield 2.39%pa Performance RMB MidCap ETF 3-month 5.67% 6-month 10.77% 12-month 12.99% 3-year (annualised) 15.27% 5-year (annualised) 22.04% Netcare Limited 4.29% Mr Price Group Ltd. 4.12% Gold Fields Ltd. 3.96% Reinet Inv Soc Anon 3.33% Redefine Properties Ltd 3.33% Lonmin plc 3.18% MMI Holdings Ltd. 3.15% Barloworld Ltd 2.86% Coronation Fund Mgrs 2.77% The Spar Group 2.7% 55
  56. 56. Strictly Private and Confidential FNB Share Saver • Share Saver gives you access to the Top 100 shares listed on the JSE by investing in the RMB Top40 and RMB MidCap Exchange Traded Funds (ETFs) • Most cost effective exposure to the equity market in SA • Invest from R300 per month via FNB Online Banking www.fnb.co.za/share-investing 756 70 80 90 100 110 120 130 140 Apr13 May13 Jun13 Jul13 Aug13 Sep13 Oct13 Nov13 Dec13 Jan14 Feb14 A return of 25.9% since inception Source: RMB Global Markets 56
  57. 57. Strictly Private and Confidential 57 57
  58. 58. Strictly Private and Confidential Strictly Private & Confidential This presentation has been prepared by FirstRand Bank Limited, acting through Rand Merchant Bank (“RMB”). The information contained in this presentation is confidential and intended solely for the use of the intended recipient. This presentation may contain information proprietary to RMB and accordingly may not be reproduced, acted upon or disseminated in whole or in part without RMB’s prior written consent. By attending this presentation, the intended recipient undertakes to keep the information contained in the presentation confidential and not to do any act or allow same to be done on his behalf which is in breach of the above mentioned prohibition. This presentation contains information which has not been independently verified by RMB. RMB and its directors, officers, employees and agents make no representation and give no warranty with respect to, and assume no responsibility for: the correctness, accuracy and completeness or otherwise of the information contained in this presentation; or the correctness or otherwise of the Advisers’ conclusions based on such information. Any liability of whatsoever nature and howsoever arising on the part of RMB, their directors, officers, employees and agents relating to the contents of this presentation is hereby expressly disclaimed. This presentation is intended for discussion purposes only and does not represent a commitment, proposal, recommendation, offer open for acceptance or agreement to enter into a transaction. Any transaction is subject to the agreement of final terms to be set out in a separate written agreement. The decision to enter into any transaction and to assume the risks associated with the transaction rests solely with the intended recipient. July 2012 Disclaimer 5858
  59. 59. A part of the FirstRand Group 2014/07/07 Client Name (change in footer) 59 THANK YOU For more information please visit www.ashburtoninvestments.com
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