Pictet Total Return-BanyanA long/short Asia ex-Japan fundFOR PROFESSIONAL INVESTORS ONLYPictet Asset ManagementNidhi Mahur...
1Pictet Asset Management
PAM total return timelineTotal AuM: USD 1.8 bn    Alphanatics    (Mkt neutral,             Corto        PTR-Corto    PTR-M...
2Pictet Total Return-Banyan
Pictet Total Return-Banyan strategy at a glance                                                                •   Luxembo...
Investment teamNidhi Mahurkar                                         Anthony Cheung                                      ...
Experienced investment team and well-resourced environment  Emerging Market Research                                      ...
Evolution of Asia ex Japan long/short strategy                                                                         Tot...
Asia ex Japan long/short strategy monthly performance  Asia markets strategy % performance (net of fees - USD) as of 31.10...
Asia ex Japan long/short strategy performance                                                                    Portfolio...
Capturing the upsideOn average over the 5 best-                                    5 best months of the Eurekahedge Asia E...
Protecting the downsideWhen Eurekahedge Asian peer                                    5 worst months of the Eurekahedge As...
3Investment approach
Our key beliefs                          •   Bottom-up investing is the key to success in equity                          ...
Investment process summary±2,000                       ±150                                50 - 90                        ...
Idea generationSystematic, repeatable and reliable process   QUANTITATIVE                                                 ...
Fundamental analysis: five alpha opportunities                              Longs                                         ...
Portfolio constructionClosing disciplines             Number of positions                                    50-90 (longs:...
Asia ex Japan long/short strategy net and gross exposureTake directional risk exploiting              Net and gross exposu...
Risk management and monitoringInvestment team responsible fordaily risk controlIndependent risk team responsiblefor ongoin...
4Portfolio composition &technical detailsPictet Asset Management   Pictet Total Return-Banyan   21
Portfolio allocation Asia ex Japan long/short strategy     Country breakdown in %                                   Long  ...
Portfolio allocation Asia ex Japan long/short strategy Market cap analysis                                                ...
Pictet Total Return-Banyan•   Reference currency:                         USD•   Legal status:                            ...
5Conclusion
Pictet Total Return-Banyan – Concluding messages                                                     COMPELLING LONG/SHORT...
6Appendices
Fundamental analysisManaging beta & exploiting alpha opportunitiesPortfolio allocation September 2002 – September 2011    ...
Long – structural winner: Bank Rakyat (Indonesia)We believe no other           Bank Rakyat (YTD +9.5%)Indonesian bank can ...
Long – structural winner: ITC (India)We believe the stock is still                               ITC (YTD +11%)cheap relat...
Short – mispriced security: Sinopharm (China)                                                                   SinopharmO...
Short – structural loser: Agricultural Bank of China (China)Two key valuation drags:                                    Ag...
Differentiation versus Asian and Global Hedge Funds                                                                       ...
Why Asia ex Japan equities long/short?Risk-return profile versus other hedge fund strategies and markets                  ...
Investment teamNidhi Mahurkar                                           Anthony Cheung                                 Oli...
For more information, please contact:                                                                                     ...
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Pictet total return banyan oct2011

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Pictet total return banyan oct2011

  1. 1. Pictet Total Return-BanyanA long/short Asia ex-Japan fundFOR PROFESSIONAL INVESTORS ONLYPictet Asset ManagementNidhi Mahurkar, Anthony Cheung, Olivier DoleiresNovember 2011
  2. 2. 1Pictet Asset Management
  3. 3. PAM total return timelineTotal AuM: USD 1.8 bn Alphanatics (Mkt neutral, Corto PTR-Corto PTR-Mandarin PTR-Kosmos Multi-Mgr) (Europe, SMID) (Europe, SMID) (China) (Credit) 9/2004 7/2006 4/2010 10/2010 6/2011 PTR-Banyan Global L/S Europe Equity Global L/S (Asia ex-Japan) (Trading) Event Driven (Macro) 11/2011 Q1/2012 Q2/2012 Q3/2012Source: Pictet Asset Management, as at 30/09/2011Pictet Asset Management Pictet Total Return-Banyan 3
  4. 4. 2Pictet Total Return-Banyan
  5. 5. Pictet Total Return-Banyan strategy at a glance • Luxembourg UCITS, with weekly liquidity • Long / Short equity strategy focused on Asia ex Japan – proven ability to produce excellent returns while offering downside protection – the strategy has delivered 16.6% per annum (in USD, net of fees) versus 14.0% MSCI EM Asia with lower volatility* • Long bias with active management of the gross and net exposure to provide downside protection • Well defined process evolved over 15 years – bottom-up stock selection allied to a proprietary screen to identify opportunities • Extensive experience investing in Asia – lead managers born and educated in Asia with well developed intelligence network on the ground*Source: Pictet Asset Management, data from 31/07/2002-31/10/2011, in USD net of fees. Past performance is no guarantee of future performance. The track record is a client strategy that NidhiMahurkar has managed since July 1996 and brought to Pictet in May 2001 and has managed throughout her tenure with Pictet Asset Management. A long only mandate at inception the fund adopted atotal return strategy in July 2002 using long and short investments in Asian ex Japan countries. Pictet Asset Management claims compliance with the Global Investment Performance Standards (GIPS).The data provided here is supplemental information.Pictet Asset Management Pictet Total Return-Banyan 5
  6. 6. Investment teamNidhi Mahurkar Anthony Cheung Olivier DoleiresHead of Total Return Banyan Senior Investment Manager Investment Manager20 years experience 6 years experience 11 years experienceResponsibilities Responsibilities ResponsibilitiesStock selection and portfolio construction Stock selection and portfolio construction Portfolio construction and risk managementHistory History HistoryPictet Asset Management 2001 to date Pictet Asset Management 2011 to date Pictet Asset Management 2000 to dateLazard 1996-2001 Gartmore 2008-2011American Express Bank 1991-1996 ABN Amro in Hong Kong 2007-2008 Central Asset Investments Hong Kong 2005-2007Education Education EducationFirst class honours degree in Economics from M.S. First class BSc in Economics from the London Certificat Fédéral de Capacité in Banking from theUniversity, Vadodara. School of Economics Commercial School in Fribourg and holds an Investment Administration Qualification (IAQ) fromMBA from the Indian institute of Management, the Securities Institute London.Bangalore. Chartered Alternative Investment Analyst (CAIA).Pictet Asset Management Pictet Total Return-Banyan 6
  7. 7. Experienced investment team and well-resourced environment Emerging Market Research Nidhi Mahurkar Other Investment Teams (6 emerging market analysts) Head of Total Return Banyan Emerging Equities (9) Emerging Debt (7) Macro Economic Analysis Long/short China (3) (5 investment professionals) Anthony Cheung Long/short Credit (3) Senior Investment Manager PAM Strategy Unit* Asian Equity Traders (18 investment professionals) Olivier Doleires (2 professionals in London) Investment Manager (2 professionals in Singapore) Risk Management (7 investment professionals) Pictet Total Return-Banyan INVESTMENT TEAM* PAM Strategy Unit is an economic forum comprising senior investment professionals from equities, fixed income and balanced investment teams across PAMPictet Asset Management Pictet Total Return-Banyan 7
  8. 8. Evolution of Asia ex Japan long/short strategy Total Return objective set Single name 450 (Cash and index futures shorts introduced 400 to manage downside risk) 350 300 Managed by Transfer 250 Nidhi Mahurkar to 200 at Lazard as a Pictet 150 long only fund % 100 50 0 -50 -100 Aug-96 Aug-97 Aug-98 Aug-99 Aug-00 Aug-01 Aug-02 Aug-03 Aug-04 Aug-05 Aug-06 Aug-07 Aug-08 Aug-09 Aug-10 Aug-11 Net Cumulative MSCI EM Asia CumulativeSource: Pictet Asset Management, data from August 1996 to August 2011, in USD net of fees. Past performance is no guarantee of future performance. The track record is a client strategy that NidhiMahurkar has managed since July 1996 and brought to Pictet in May 2001 and has managed throughout her tenure with Pictet Asset Management. A long only mandate at inception the fund adopted atotal return strategy in July 2002 using long and short investments in Asian ex Japan countries. Pictet Asset Management claims compliance with the Global Investment Performance Standards (GIPS). Thedata provided here is supplemental information.Pictet Asset Management Pictet Total Return-Banyan 8
  9. 9. Asia ex Japan long/short strategy monthly performance Asia markets strategy % performance (net of fees - USD) as of 31.10.2011 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Total return 2002 2.5 -7.3 0.2 8.9 -1.7 2.0 2003 2.5 -4.4 -6.4 1.7 7.8 7.6 6.7 8.9 3.2 14.4 3.5 10.2 69.0 2004 -0.6 2.4 1.5 0.1 -8.2 -1.8 -1.8 4.7 5.3 3.1 10.7 2.6 18.1 2005 2.9 9.0 -9.4 -3.0 3.3 3.2 8.2 -3.6 10.2 -6.9 9.9 6.5 31.7 2006 6.3 -4.7 1.4 9.3 -8.0 -2.8 -1.1 2.4 5.5 5.3 11.2 2.3 28.5 2007 0.2 -1.5 0.3 6.2 7.7 2.6 9.9 -4.9 8.2 7.2 -9.6 -0.8 26.3 2008 -7.8 1.8 -3.1 -2.0 -4.0 -5.0 -4.0 -1.9 -5.1 -2.7 -0.2 0.1 -29.3 2009 -3.8 -1.6 1.3 6.5 13.7 -4.9 10.9 -4.9 9.4 -1.0 5.4 4.9 39.5 2010 -7.0 1.2 8.6 5.6 -9.3 -2.5 3.7 2.7 10.9 0.6 -3.2 -0.4 9.4 2011 -6.7 -1.2 9.9 4.3 -4.1 0.1 1.2 -7.7 -6.7 -0.4 -11.9 • No double digit monthly loss since inceptionSource: Pictet Asset Management, data from 31/07/2002-31/10/2011, in USD net of fees. Past performance is no guarantee of future performance. The track record is a client strategy that NidhiMahurkar has managed since July 1996 and brought to Pictet in May 2001 and has managed throughout her tenure with Pictet Asset Management. A long only mandate at inception the fund adopted atotal return strategy in July 2002 using long and short investments in Asian ex Japan countries. Pictet Asset Management claims compliance with the Global Investment Performance Standards (GIPS).The data provided here is supplemental information. Pictet Asset Management Pictet Total Return-Banyan 9
  10. 10. Asia ex Japan long/short strategy performance Portfolio in USD, net of fees versus MSCI EM Asia Pictet Asia MSCI EM ex Japan L/S Asia 600Cumulative return 313.0% 237.3% 500Annualised return 16.6% 14.0% 400Annualised volatility 20.0% 24.8%Sharpe ratio 0.70% 0.46% 300Sortino ratio 1.47% 0.97% 200 100 0 Mar-04 Mar-09 May-03 Nov-05 May-08 Nov-10 Jan-05 Sep-06 Jan-10 Sep-11 Jul-02 Jul-07 Pictet Asia ex Japan L/S MSCI EM Asia 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011*Pictet Asia ex Japan L/S 2.0% 69.0% 18.1% 31.7% 28.5% 26.3% -29.3% 39.5% 9.4% -11.9% MSCI EM Asia -8.7% 51.0% 15.3% 27.5% 33.2% 41.6% -52.8% 74.2% 19.4% -10.1%Source: Pictet Asset Management, data from 31/07/2002-31/10/2011, in USD net of fees. Past performance is no guarantee of future performance. The track record is a client strategy that NidhiMahurkar has managed since July 1996 and brought to Pictet in May 2001 and has managed throughout her tenure with Pictet Asset Management. A long only mandate at inception the fund adopted atotal return strategy in July 2002 using long and short investments in Asian ex Japan countries. Pictet Asset Management claims compliance with Global Investment Performance Standards (GIPS). Thedata provided here is supplemental information.* Data as at end of October 2011.Pictet Asset Management Pictet Total Return-Banyan 10
  11. 11. Capturing the upsideOn average over the 5 best- 5 best months of the Eurekahedge Asia Ex Japan L/S, in USD net since July 2002performing months of the %Eurekahedge Asia Ex Japan 18L/S, the strategy outperformed 15 12the Eurekahedge peer group 9 6 3 0 May-09 Sep-07 Jan-06 Apr-09 Jul-09 Average 5 best months Eurekahedge Asia Ex Japan L/S Pictet Strategy MSCI EM Asia Average 5 May-09 Sept-07 Jan-06 April-09 Jul-09 best months Eurekahedge Asia 11.7% 7.0% 6.8% 6.7% 6.7% 7.8% Ex Japan L/S Pictet Asia ex 13.7% 8.2% 6.3% 6.5% 10.9% 9.1% Japan L/S strategy MSCI EM Asia 15.1% 11.8% 7.7% 16.7% 12.7% 12.8%Source: Bloomberg and Pictet Asset Management, data from 31/07/2002-31/10/2011, in USD net of fees. Past performance is no guarantee of future performance. The track record is a client strategythat Nidhi Mahurkar has managed since July 1996 and brought to Pictet in May 2001 and has managed throughout her tenure with Pictet Asset Management. A long only mandate at inception the fundadopted a total return strategy in July 2002 using long and short investments in Asian ex Japan countries. Pictet Asset Management claims compliance with Global Investment Performance Standards(GIPS). The data provided here is supplemental information.Pictet Asset Management Pictet Total Return-Banyan 11
  12. 12. Protecting the downsideWhen Eurekahedge Asian peer 5 worst months of the Eurekahedge Asia Ex Japan L/S, in USD net since July 2002group suffered their largestnegative performance, the 0 -5strategy successfully -10controlled losses -15 -20 -25 % Oct-08 Sep-11 Jan-08 Sep-08 Jun-08 Average 5 worst months Eurekahedge Asia Ex Japan L/S Pictet Strategy MSCI EM Asia Average 5 Oct-08 Sep-11 Jan-08 Sep-08 Jun-08 worst months Eurekahedge Asia -9.8% -8.5% -8.4% -7.4% -6.3% -8.1% Ex Japan L/S Pictet Asia ex Japan -2.7% -6.7% -7.8% -5.1% -5.0% -5.5% L/S strategy MSCI EM Asia -24.1% -12.7% -14.3% -16.6% -12.5% -16.0%Source: Bloomberg and Pictet Asset Management, data from 31/07/2002-31/10/2011, in USD net of fees. Past performance is no guarantee of future performance. The track record is a client strategythat Nidhi Mahurkar has managed since July 1996 and brought to Pictet in May 2001 and has managed throughout her tenure with Pictet Asset Management. A long only mandate at inception the fundadopted a total return strategy in July 2002 using long and short investments in Asian ex Japan countries. Pictet Asset Management claims compliance with Global Investment Performance Standards(GIPS). The data provided here is supplemental information.Pictet Asset Management Pictet Total Return-Banyan 12
  13. 13. 3Investment approach
  14. 14. Our key beliefs • Bottom-up investing is the key to success in equity markets over time • Only cash flows matter, not reported earnings • Look for non-linear growth opportunities in Asia • Valuation focused approach, we also look at prospects • Filter out the noise and avoid overcrowded trades • Take advantage of momentum based mispricing • Greater market inefficiencies persist in Asia providing a favourable environment for stock pickingPictet Asset Management Pictet Total Return-Banyan 14
  15. 15. Investment process summary±2,000 ±150 50 - 90 companies Positionscompanies±1200 Large & Mid Caps( > USD 500m)±800 Small Caps ( USD 250-500m)IDEA FUNDAMENTAL PORTFOLIO RISKGENERATION ANALYSIS CONSTRUCTION MANAGEMENTPROPRIETARY QUANTITATIVE Scenario based risk reward TYPICAL EXPOSURE INVESTMENT TEAMSCREENING assessment Gross: 100-170% Pro-actively managing riskFocus on free cash-flow HOLT Cash Flow Return on Net: 40-90% Dynamic stop loss InvestmentQUALITATIVE IDEA SOURCING Market Expectations - What is POSITIONS INDEPENDENT RISK TEAMPictet equity analysts priced in Long: 20-60 Value at RiskExternal research network Short: 0-30 Liquidity MEET & EVALUATE MANAGEMENT Leverage Industry factors SCALING AND SIZING POSITIONS Franchise factors Management track-record Corporate governance QUINTILE RANKING FIVE ALPHA OPPORTUNITIES CLOSING DISCIPLINES DAILY RISK REPORT GLOBAL MACRO ECONOMIC AND SECTOR VIEWS Pictet Total Return-Banyan 15
  16. 16. Idea generationSystematic, repeatable and reliable process QUANTITATIVE QUALITATIVE PROPRIETARY SCREENING MODEL • Management meetings Output ~150 updated weekly (~ 400 per annum) Companies • Industry contacts 3 stock specific filters • Pictet research analysts • Valuation • Sell side research • Earnings revisions momentum Output ~150 Companies • Intelligence networks • Earnings quality • Buy side contacts List of potential longs and Focus on free cash flow shorts grouped in quintiles Databases Output ~150 CompaniesPictet Asset Management Pictet Total Return-Banyan 16
  17. 17. Fundamental analysis: five alpha opportunities Longs Shorts Structural winners / Companies with dominant market positions, Competitively disadvantaged companies, flawed1 losers consistently strong operations, attractive cash flow business models, poor cash flow generation, characteristics on relatively inexpensive valuations unattractive valuation Restructuring / Cost cutting, asset disposals, deleveraging, positive Negative management change, overly aggressive2 turnaround plays management change or positive shift in industry M&A, overleveraging of balance sheets, negative dynamics shift in industry dynamics Mispriced Unjustifiably pessimistic market expectations, Overly optimistic expectations resulting in3 securities undervalued assets and cash flows, catalysts unsustainable valuations, catalyst needed to correct needed to correct mispricing mispricing Earnings surprise Unexpected positive earnings surprises Unexpected negative earnings surprises4 Small caps Overlooked, under-researched securities with high No shorting of small cap stocks5 potential alpha based on competitive advantage, can include potential M&A targetsPictet Asset Management Pictet Total Return-Banyan 17
  18. 18. Portfolio constructionClosing disciplines Number of positions 50-90 (longs: 20-60, shorts: 0-30) • continuous monitoring of 1.5-5% at cost Typical long positions expectations • better opportunities Typical short positions 1-3% at cost • disciplined price targets Single stocks, Contracts for Difference, Options, Indices Long exposure • thesis no longer valid • technical analysis Contracts for Difference, Options, Indices, Stock Futures, Short exposure Total Return Swaps Currency risk The fund is denominated in USD. Typical gross exposure* 100-170% Typical net exposure* 40-90% Dynamic stop loss (shorts only) 20% at single stock level, 50 bps at portfolio level * Excluding extreme market conditions - These figures represent anticipated typical exposure and not limits. There may be occasions when we are net short.Pictet Asset Management Pictet Total Return-Banyan 18
  19. 19. Asia ex Japan long/short strategy net and gross exposureTake directional risk exploiting Net and gross exposure since July 2002the long term outperformance August 07of Asia ex Japan 260% 450% May 09 240% 400% 220%Long and short approach across 200% 350%macro environment 180% 160% 300%Defensive positioning in poor 140% 250% Cumulative Returnsmarkets 120% % of AUM 100% 200% 80% 150% 60% 40% 100% 20% 50% 0% -20% 0% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 MSCI EM Asia TRI USD Cuml. Return GROSS NET Source: Pictet Asset Management, data from 31/07/2002-31/10/2011, in USD net of fees. Past performance is no guarantee of future performance. The track record is a client strategy that Nidhi Mahurkar has managed since July 1996 and brought to Pictet in May 2001 and has managed throughout her tenure with Pictet Asset Management. A long only mandate at inception the fund adopted a total return strategy in July 2002 using long and short investments in Asian ex Japan countries. Pictet Asset Management claims compliance with Global Investment Performance Standards (GIPS). The data provided here is supplemental information.Pictet Asset Management Pictet Total Return-Banyan 19
  20. 20. Risk management and monitoringInvestment team responsible fordaily risk controlIndependent risk team responsiblefor ongoing monitoring of risk: - Volatility - Exposure limits - VaR - Individual stock limits - Portfolio concentration - Single factor exposure - Market cap OVERALL INDIVIDUAL - Liquidity PORTFOLIO SEGMENT LEVEL EXCEPTIONS - Country & sector breakdown - Stress testing • On-going monitoring of • Liquidity • Any breaches or problems overall risk • Long - Mkt Cap>USD500m are immediately brought characteristics to the attention of theRisk tool – APT • Short - Mkt Cap >USD1bn • Analysis of major investment manager • Long Small Cap - Max 10% common risk sources • Investment manager toRegular formal review with Head of (Mkt Cap USD250m – • Liquidity constraints: USD500m) take appropriate actionPerformance and Risk and Head of 90% of the total portfolio • Price movement greaterTotal Return Equities can be liquidated in 1 than 15% triggers a review week • Analysis of diversification • Gross and Net exposure of bets and success rate of different types of betsPictet Asset Management Pictet Total Return-Banyan 20
  21. 21. 4Portfolio composition &technical detailsPictet Asset Management Pictet Total Return-Banyan 21
  22. 22. Portfolio allocation Asia ex Japan long/short strategy Country breakdown in % Long Short Sector breakdown in % Long Short China 24.7 -11.1 Energy 7.9 0.0 Hong Kong 4.2 -5.2 Materials 7.5 0.0 India 26.5 0.0 Industrials 7.0 -2.1 Indonesia 3.1 0.0 Cons. Discretionary 16.2 -5.2 Philippines 0.7 0.0 Cons. Staples 7.7 0.0 Singapore 5.3 -2.1 Financials 15.6 -8.4 Thailand 0.5 0.0 IT 0.0 0.0 Telecom. Services 0.7 0.0 Utilities 2.4 -2.6 Exposure in % Top 5 long positions in % Hdfc Bank 3.4 Net 46.7 Itc – Dematerialised 3.1 Gross 83.4 Hero Motocorp 2.9 Li & Fung 2.7 Tata Motors 2.7 Source: Pictet Asset Management, as at 31 October 2011. Nidhi Mahurkar has managed this strategy since July 1996. She brought it to Pictet in May 2001 and has managed it throughout her tenure with Pictet Asset Management. A long only mandate at inception the fund adopted a total return strategy in July 2002 using long and short investments in Asian ex Japan countries.Pictet Asset Management Pictet Total Return-Banyan 22
  23. 23. Portfolio allocation Asia ex Japan long/short strategy Market cap analysis Days to liquidate* % Long Short % Long Short Less than USD 1b 4.7 0.0 Less than 1 day 95.0 99.5 USD 1b-5b 10.7 -2.7 1 to 5 days 4.6 0.5 USD 5b-15b 22.7 -6.1 More than 5 days 0.4 0.0 More than USD 15b 27.0 -9.5 Total* 100.0 100.0 Total 65.1 -18.3* Days to liquidate positions in the portfolio using one fifth of the average three months trading volumeSource: Pictet Asset Management, as at 31 October 2011.Nidhi Mahurkar has managed this strategy since July 1996. She brought it to Pictet in May 2001 and has managed it throughout her tenurewith Pictet Asset Management. A long only mandate at inception the fund adopted a total return strategy in July 2002 using long and short investments in Asian ex Japan countries.Pictet Asset Management Pictet Total Return-Banyan 23
  24. 24. Pictet Total Return-Banyan• Reference currency: USD• Legal status: Luxembourg SICAV - Part I - UCITS• EU Saving Directive: in scope, tax• NAV calculation: weekly on Friday• Notice period: 5 business days prior to NAV (5pm on Friday, Luxembourg time)• Performance fee: 20% with high watermark• Hurdle rate: USD LIBOR 3 months• Launch date: 2 November 2011• Hedged share classes: available on demand (EUR, GBP, CHF)Class ISIN Code Management Fee Adm & Custody FeesI USD* I USD LU0637929265 1.10% 0.40%P USD P USD LU0637929778 1.60% 0.40%(*) Minimum initial investment: USD 1,000,000Pictet Asset Management Pictet Total Return-Banyan 24
  25. 25. 5Conclusion
  26. 26. Pictet Total Return-Banyan – Concluding messages COMPELLING LONG/SHORT STRATEGY RISK RETURN PROFILE INVESTMENT TEAM LEGAL FRAMEWORK Proven ability to produce The strategy has delivered A portfolio management UCITS compliant with excellent returns by 16.6% per annum (in USD, team with extensive weekly liquidity capturing Asian market net of fees) versus 14.0% emerging markets growth while offering MSCI EM Asia with lower experience, local language downside protection skills and a local network volatility of contactsSource: Pictet Asset Management, data from 31/07/2002-31/10/2011, in USD net of fees. Past performance is no guarantee of future performance. The track record is a client strategy that NidhiMahurkar has managed since July 1996 and brought to Pictet in May 2001 and has managed throughout her tenure with Pictet Asset Management. A long only mandate at inception the fund adopted atotal return strategy in July 2002 using long and short investments in Asian ex Japan countries. Pictet Asset Management claims compliance with Global Investment Performance Standards (GIPS). Thedata provided here is supplemental information.Pictet Asset Management Pictet Total Return-Banyan 26
  27. 27. 6Appendices
  28. 28. Fundamental analysisManaging beta & exploiting alpha opportunitiesPortfolio allocation September 2002 – September 2011 250 200 Gross exposure % 150 100 50 0 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Structural winners / losers Restructuring / Mispriced Earnings Small Turnaround plays securities surprise CapSource: Pictet Asset Management, data from Sept 2002 to September 2011. Gross allocation, rebased to 100. The track record is a client strategy that Nidhi Mahurkar has managed since July 1996and brought to Pictet in May 2001 and has managed throughout her tenure with Pictet Asset Management. A long only mandate at inception the fund adopted a total return strategy in July 2002 usinglong and short investments in Asian ex Japan countries.Pictet Asset Management Pictet Total Return-Banyan 28
  29. 29. Long – structural winner: Bank Rakyat (Indonesia)We believe no other Bank Rakyat (YTD +9.5%)Indonesian bank can seriously 7,500compete with BRI’s dominance 7,000in the sub IDR 50m loan 6,500category – where it has 6,000already cornered the market 5,500 5,000 4,500 4,000 3,500 Oct 10 Sep 10 Dec 10 Feb 11 Nov 10 Mar 10 Apr 10 May 10 Jun 10 Jul 10 Jan 11 Mar 11 Apr 11 May 11 Jun 11 Jul 11 Aug 10 Aug 11 Last Price Source : Bloomberg • Leader in microfinance (32% of loans) in Indonesia with the best operating metrics of almost any bank in the world driven by ongoing demand for high yield consumer credit • Good credit quality, rising pre-provision profitability • Screens as cheap relative to growth and profitability at 10.2 x 2012 P/E, 2.6x 2012 P/B for a 31% ROE and strong positive earnings revisionsSource: Pictet Asset Management, as at 27 September 2011.Pictet Asset Management Pictet Total Return-Banyan 29
  30. 30. Long – structural winner: ITC (India)We believe the stock is still ITC (YTD +11%)cheap relative to consumer 230peers in Asia 210 190 170 150 130 110 90 70 Sep 09 Sep 10 Nov 09 Nov 10 Mar 09 May 09 Jul 09 Jan 10 Mar 10 May 10 Jul 10 Jan 11 Mar 11 May 11 Jul 11 Last Price Source : Bloomberg • India’s leading diversified consumer goods company -market leader in cigarettes and a portfolio of strong consumer brands • Strongly rising operating and free cash flow driven by higher profits from cigarettes • ROEs rising sharply as the company has increased dividend pay out ratio from 50-80% • Non cigarette capex stable and declining as percentage of cash flow – efficiency ratios moving in the right direction • Still on a high growth trajectory with strong earnings revisionsSource: Pictet Asset Management, as at 27 September 2011.Pictet Asset Management Pictet Total Return-Banyan 30
  31. 31. Short – mispriced security: Sinopharm (China) SinopharmOur quantitative screen 31highlights Sinopharm - an 29expensive stock with very poor 27 Shortcashflow generation 25 23 Cover Cover Position closed 21 end September 19 17 15 31 May 11 07 Jun 11 14 Jun 11 21 Jun 11 28 Jun 11 06 Sep 11 05 Jul 11 12 Jul 11 19 Jul 11 26 Jul 11 02 Aug 11 09 Aug 11 16 Aug 11 23 Aug 11 30 Aug 11 Last Price Source : Bloomberg • The largest pharmacy distributor in China screening as grossly overvalued • Red Alert on our screen with P/E 28x, price/cash flow 23x, P/B 2.6x vs 12% ROE - poorly valued on HOLT cash flow returns • Highly exposed to government policy changes • Negative catalyst as NDRC announced first batch of pricing cuts on provincial drug tenders • The companys balance sheet showed considerable deterioration • Closed short after 23% returnSource: Pictet Asset Management, as at 27 September August 2011.Pictet Asset Management Pictet Total Return-Banyan 31
  32. 32. Short – structural loser: Agricultural Bank of China (China)Two key valuation drags: Agricultural Bank of China: 32% returncapital raising pressure & Short Shortasset quality likely to affect 5.20the banks earnings and 4.80growth strategy in a negative 4.40 Position closedway 4.00 end September 3.60 3.20 2.80 2.40 2.00 03-Jun-11 17-Jun-11 01-Jul-11 15-Jul-11 29-Jul-11 25-Feb-11 11-Mar-11 25-Mar-11 08-Apr-11 22-Apr-11 12-Aug-11 26-Aug-11 09-Sep-11 23-Sep-11 06-May-11 20-May-11 Last price Source: Bloomberg • Low LDR with no way to leverage as monetary policy will not loosen in 2H • Early signs of NPL risks in Local Government Financing Vehicles • Valuation at 1.7x P/B , 20% ROE extremely vulnerable as medium term ROE likely to fade to 14% on our scenario analysis • The bank went through the IPO price and derated from P/B1.7x to P/B1.1x 1 year forward - P/B in a space of 6 months - position closedSource: Pictet Asset Management, as at 27 September 2011.Pictet Asset Management Pictet Total Return-Banyan 32
  33. 33. Differentiation versus Asian and Global Hedge Funds 0.7Differentiated from Asian and 0.6global hedge funds, 0.5 0.4particularly in down markets 0.3 0.2 0.1Demonstrated high ability to 0.0generate returns independently R Squared R Squared in Up Markets R Squared in Down Marketsfrom market movements Eurekahedge Asia ex Japan Long/Short Equity Dow Jones Credit Suisse Hedge Fund Index MSCI EM Asia R Squared in R Squared in R Squared up markets down markets Eurekahedge Asia ex Japan Long/Short 0.63 0.48 0.11 Equity Dow Jones Credit Suisse Hedge Fund 0.36 0.31 0.02 Index MSCI EM Asia 0.61 0.28 0.15 Beta in up Beta in down Beta markets markets Pictet Asia ex Japan L/S strategy 0.66 0.61 0.28Source: Hedge Fund Intelligence, MSCI, Dow Jones Credit Suisse, 24 August 2011Past performance is no guarantee of future performance. The track record is a client strategy that Nidhi Mahurkar has managed since July 1996 and brought to Pictet in May 2001 and has managedthroughout her tenure with Pictet Asset Management. A long only mandate at inception the fund adopted a total return strategy in July 2002 using long and short investments in Asian ex Japan countries.Pictet Asset Management Pictet Total Return-Banyan 33
  34. 34. Why Asia ex Japan equities long/short?Risk-return profile versus other hedge fund strategies and markets 31.07.2002-31.10.2011 18.00% 16.00% 14.00% Annualized Return 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% 0% 5% 10% 15% 20% 25% 30% Annualized Volatility Pictet Asia ex Japan L/S Strategy MSCI EM Asia Eurekahedge Asia ex Japan L/S MSCI World Citigroup WGBI CS EM Hedge Fund IndexSource: Pictet Asset Management, data from July 2002 to October 2011, in USD net of fees. Past performance is no guarantee of future performance. The track record is a client strategy that NidhiMahurkar has managed since July 1996 and brought to Pictet in May 2001 and has managed throughout her tenure with Pictet Asset Management. A long only mandate at inception the fund adopted atotal return strategy in July 2002 using long and short investments in Asian ex Japan countries.Pictet Asset Management Pictet Total Return-Banyan 34
  35. 35. Investment teamNidhi Mahurkar Anthony Cheung Olivier DoleiresHead of Total Return Banyan Senior Investment Manager Investment Manager Anthony joined Pictet Asset Management in Olivier joined Pictet & Cie in 1999 and moved toNidhi joined Pictet Asset Management in 2001 May 2011. Anthony was previously at Pictet Asset Management in 2000. Before joiningfrom Lazard Asset Management where she focused Gartmore Investment Management as an the Pictet Total Return-Banyan team, Olivier spenton country funds and global emerging markets investment manager in the global emerging 5 years as an Investment Manager in the Multi-sector research, covering utilities, financials and markets team, specialising in China and Asset and Total-Return team in Geneva where hetechnology. Prior to Lazard, she worked at industrials. Before Gartmore, he worked at was managing Absolute Return funds.American Express Bank. ABN AMRO Asset Management and Central At the beginning of his career at Pictet AssetAt Pictet Nidhi has been managing a Asia total Asset Investments in Hong Kong covering Management, Olivier spent six years in London andreturn strategy since 2002. Prior to her current long/short Asian strategies. Geneva setting up the Hedge Funds Servicing unit.position she has been leading Asia ex Japan andGlobal Emerging Markets portfolio construction Anthony is born and brought up in Hong Kong. Olivier obtained a Certificat Fédéral de Capacité inteams. He has a first class BSc in Economics from Banking from the Commercial School in Fribourg the London School of Economics. and holds an Investment AdministrationNidhi is born and educated in India She graduated Anthony is fluent in English, Mandarin and Qualification (IAQ) from the Securities Institutewith a first class honours degree in Economics Cantonese. London. He is also a Chartered Alternativefrom M.S. University, Vadodara and has a MBA Investment Analyst (CAIA).from the Indian institute of Management,Bangalore.Nidhi is fluent in English, Hindi and Marathi.Pictet Asset Management Pictet Total Return-Banyan 35
  36. 36. For more information, please contact: Pictet Asset Management SA Route des Acacias 60, 1211 Geneva 73 Pictet Asset Management Limited Authorised and regulated by the Financial Services Authority Moor House, Level 11Risk factors 120 London WallThe value of an investment can go down as well as up and investors may not getback the full amount invested. The value of overseas securities will be subject to London EC2Y 5ETexchange rate fluctuations. Any views or opinions expressed in the preparation ofthis document are based upon sources believed to be reliable, but norepresentation or warranty is given as to the accuracy or completeness of thosesources.This marketing document is issued by Pictet Funds (Europe) S.A. It is neither directed to, nor intended for distribution or use by, any person or entity who is a citizen or resident of or located in any locality,state, country or jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. Only the latest version of the fund’s prospectus, regulations, annual and semi-annual reports may be relied upon as the basis for investment decisions. These documents are available on www.pictetfunds.com or at Pictet Funds (Europe) S.A., 3 Boulevard Royal, L-2449 Luxembourg.The information and data presented in this document are not to be considered as an offer or solicitation to buy, sell or subscribe to any securities or financial instruments.Information, opinions and estimates contained in this document reflect a judgment at the original date of publication and are subject to change without notice. Pictet Funds (Europe) S.A. has not taken anysteps to ensure that the securities referred to in this document are suitable for any particular investor and this document is not to be relied upon in substitution for the exercise of independent judgment. Taxtreatment depends on the individual circumstances of each investor and may be subject to change in the future. Before making any investment decision, investors are recommended to ascertain if thisinvestment is suitable for them in light of their financial knowledge and experience, investment goals and financial situation, or to obtain specific advice from an industry professional.The value and income of any of the securities or financial instruments mentioned in this document may fall as well as rise and, as a consequence, investors may receive back less than originally invested.Risk factors are listed in the fund’s prospectus and are not intended to be reproduced in full in this document.Past performance is neither guarantee nor a reliable indicator of future results. Performance data does not include the commissions and fees charged at the time of subscribing for or redeeming shares. Thismarketing material is not intended to be a substitute for the fund’s full documentation or for any information which investors should obtain from their financial intermediaries acting in relation to theirinvestment in the fund or funds mentioned in this document.This document is for professional investors only. www.pictet.com

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