Commodities
Christopher Wyke
Commodities Specialist / Fund Management
Stephan Eckstein, Head of Intermediary Sales
stephan...
Schroders AS Commodity Fund
Started in October 2005, managed by a stable and proven commodity specialist team
 Research d...
Schroder AS Commodity Fund
A strong long term track record : October 2005 – August 2013
2Commodities | September 2013
*I S...
A lower risk, more liquid, more transparent, higher return strategy
Why Schroders for commodities
A unique and innovative ...
Futures
Agriculture Metals Energy
Barley Butter Canola Cocoa Coffee Corn Aluminium
Brent Crude
Oil
Cotton Ethanol Feed Whe...
Natural gas Total Returns Brent Total Returns
Schroders Approach
Why commodity selection is critical
5Commodities | Septem...
-20
0
20
40
60
Jan
07
Feb
07
Mrz
07
Apr
07
Mai
07
Jun
07
Jul
07
Aug
07
Sep
07
Okt
07
Nov
07
Dez
07
-30
-10
10
Sep
12
Okt
1...
0
200
400
600
800
1'000
1'200
Nov
96
Jun
97
Jan
98
Aug
98
Mrz
99
Okt
99
Mai
00
Dez
00
Jul
01
Feb
02
Sep
02
Apr
03
Nov
03
J...
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Feb 06 Jul 06 Dez 06 Mai 07 Okt 07 Mrz 08 Aug 08 Jan 09 Jun 09 Nov 09 Apr 10 S...
-40
-20
0
20
40
60
80
100
120
140
FeederCattle
Aluminium
NaturalGas
Coffee
Zinc
Wheat
Lumber
Sugar
SoybeanOil
KansasWheat
...
85
90
95
100
105
110
Okt 13 Nov
13
Dez
13
Jan
14
Feb
14
Mrz
14
Apr 14 Mai
14
Jun
14
Jul 14 Aug
14
Sep
14
Okt 14 Nov
14
Dez...
Investment Outlook
11Commodities | September 2013
Investment outlook
Global Environment
12Commodities | September 2013
Source: Source: Schroders; Thomson Datastream – 31 Ju...
0
5'000
10'000
15'000
20'000
25'000
30'000
35'000
40'000
0
2'000
4'000
6'000
8'000
10'000
12'000
1995 1998 2001 2004 2007 ...
OECD vs. Non OECD Oil Demand Oil Global Crude Oil Supply Demand Balance
Investment outlook
Oil
14Commodities | September 2...
Investment outlook
Oil: Cost of Production vs. Current Account Balance
15Commodities | September 2013
Source: Total SA; Sc...
Country 2012 (tonnes) 10 year change
World Total 2700 4.6%
China 370 93%
Australia 250 -8%
US 230 -23%
Russia 205 22%
SA 1...
Investment outlook
Gold: Know ETF holdings
17Commodities | September 2013
Source: Bloomberg 31 August 2013
0
10'000'000
20...
Investment outlook
Gold as % of total reserves
18Commodities | September 2013
Source: World Gold Council – July 2013
0%
10...
Investment outlook
Total Chinese Gold Demand
19Commodities | September 2013
Source: CPM Group – 31 May 2012
0
5
10
15
20
2...
Investment outlook
Gold and silver: Large corrections, long term opportunities
20Commodities | September 2013
Source: Data...
0
1'000
2'000
3'000
4'000
5'000
6'000
7'000
8'000
9'000
10'000
2001 2003 2005 2007 2009 2011 2013
Copper Nickel Zinc
Inves...
1500
2000
2500
3000
3500
4000
Dez 2010 Jun 2011 Dez 2011 Jun 2012 Dez 2012 Jun 2013
0
50
100
150
200
250
Dez 2010 Jun 2011...
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
0
10'000
20'000
30'000
40'000
50'000
60'000
70'000
80'000
90'000
100'000
1960/1961 ...
“Rest of the World” Cotton Ending Stocks vs.
Stock-to-Use Ratio
Chinese vs. US Cotton Prices
Investment outlook
Large diff...
Sector weights vs benchmark^
Schroder AS Commodity Fund
As at 31 July 2013
25Commodities | September 2013
Source: Schroder...
Schroder AS Commodity Fund
A strong long term track record : October 2005 – August 2013
26Commodities | September 2013
*I ...
A lower risk, more liquid, more transparent, higher return strategy
Why Schroders for commodities
A successful approach to...
Appendix
28Commodities | September 2013
People
Investment team and resources
29Commodities | September 2013
Data as at 29 February 2012
Agriculture
Geoff Blanning...
Investment process
Market analysis
30Commodities | September 2013
Asset
Allocation
Portfolio
Construction
Risk Control
Mar...
Investment process
Commodity analysis
31Commodities | July 2013
Investment
Summary
Risk Model
Commodity AnalysisWeekly
Dem...
Liquidity-based diversification and exposure limits
Portfolio construction
Our diversification limits are a significant pa...
The Team
33
Geoff Blanning, Head of EMD
• Head of Emerging Markets Debt since December 1998, member of the
Group Managemen...
The views and opinions contained herein are those of the Schroders Commodity Team, and may not necessarily represent views...
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Schroders commodities

  1. 1. Commodities Christopher Wyke Commodities Specialist / Fund Management Stephan Eckstein, Head of Intermediary Sales stephan.eckstein@schroders.com; 044-250 12 09 Arnaud d’Anterroches, Relationship Manager arnaud.danterroches@schroders.com; 022-818 41 25
  2. 2. Schroders AS Commodity Fund Started in October 2005, managed by a stable and proven commodity specialist team  Research driven, actively managed fund  Long only, no leverage  Index unconstrained  Invests in futures, equities, swaps and cash  Equal emphasis on agriculture, energy and metals  Investment, not trading  Diversified approach 1Commodities | September 2013 *Schroder Alternative Solutions is referred to as Schroder AS throughout this presentation
  3. 3. Schroder AS Commodity Fund A strong long term track record : October 2005 – August 2013 2Commodities | September 2013 *I Shares Gross daily NAV to NAV **Inception 31 October 2005 ^For performance comparison purposes only Source: Schroders; Bloomberg; Reuters/Jefferies; S&P Goldman Sachs; Dow Jones; Diapason USD % 2005** 2006 2007 2008 2009 2010 2011 2012 2013 YTD Schroder AS Commodity Fund* 3.00 18.62 34.73 -35.29 34.03 15.36 -6.04 0.11 -3.79 Average of all 4 Indices^ 3.04 -3.36 25.19 -39.65 20.57 15.63 -7.46 -0.51 -1.42 S&P Goldman Sachs CI TR -1.09 -15.09 32.67 -46.49 13.49 9.03 -1.18 0.07 +2.58 RJ CRB TR 5.60 -2.85 22.15 -35.04 23.65 17.60 -8.21 -3.28 -1.26 DJ UBS Commodity TR 3.45 2.07 16.23 -35.65 18.91 16.83 -13.32 -1.05 -6.16 Rogers Int. Commodity TR 4.24 3.05 30.01 -41.35 26.23 19.01 -6.93 2.02 -0.83 USD % Since Inception** Cumulative Total Return Annual Rate of Return Volatility Sharpe Ratio Schroder AS Commodity Fund* 49.11 5.29 18.68 0.26 Average of all 4 Indices^ -4.82 -0.64 20.78 -0.02 S&P Goldman Sachs CI TR -25.15 -3.67 24.49 -0.11 RJ CRB TR 3.76 0.48 19.58 0.03 DJ UBS Commodity TR -11.70 -1.59 19.15 -0.09 Rogers Int. Commodity TR 15.88 1.92 21.32 0.11
  4. 4. A lower risk, more liquid, more transparent, higher return strategy Why Schroders for commodities A unique and innovative approach to investing 1. Wider opportunity set – means increased diversification, lower volatility, more opportunity 2. Active rotation – to take advantage of price leadership and low sector correlations 3. Index unconstrained – avoid inefficiencies and limit downside volatility 4. Use of equity exposure – broadens sources of return e.g. Uranium, Fertiliser, Coal 5. Global exchange choice – capitalising on regional pricing differences 6. Contract choice – finding the most efficient place to invest 7. Use of cash – to protect capital, benefit from market timing 3Commodities | September 2013 How Schroders adds value:
  5. 5. Futures Agriculture Metals Energy Barley Butter Canola Cocoa Coffee Corn Aluminium Brent Crude Oil Cotton Ethanol Feed Wheat Feeder Cattle Oats Lean Hogs Copper Fuel Oil Live Cattle Lumber Maize Milk Rice Palm Oil Gold Gas Oil Potatoes Pulp Orange Juice Rapeseed Sunflower Seeds Rough Rice Lead Gasoline Rubber Soybean Soybean Meal Soybean Oil Sugar Nickel Heating Oil Wheat Wool Palladium Natural Gas Platinum Propane Silver WTI Crude Oil Tin Zinc Commodities only accessible through Equities Alternative Energy Coal Cobalt Diamonds Dairy Products Fertilizer Fish & Fish Products Fruits Precious Stones Spices Steel Tea Uranium Vegetables Rogers Int. Commodity S&P Goldman Sachs Commodity DJ AIG Commodity RJ CRB Commodity Agriculture Metals Energy Agriculture Metals Energy Agriculture Metals Energy Agriculture Metals Energy 22 9 4 11 6 6 9 6 4 10 5 4 Opportunities for active management: more Commodities Source: Schroders; Bloomberg – as at January 2013 Schroder Commodities universe (63)
  6. 6. Natural gas Total Returns Brent Total Returns Schroders Approach Why commodity selection is critical 5Commodities | September 2013 Source: Datastream – 30 August 2013 0 20 40 60 80 100 120 2005 2006 2007 2007 2008 2009 2009 2010 2011 2011 2012 2013 0 50 100 150 200 250 2005 2006 2007 2007 2008 2009 2009 2010 2011 2011 2012 2013
  7. 7. -20 0 20 40 60 Jan 07 Feb 07 Mrz 07 Apr 07 Mai 07 Jun 07 Jul 07 Aug 07 Sep 07 Okt 07 Nov 07 Dez 07 -30 -10 10 Sep 12 Okt 12 Nov 12 Dez 12 Jan 13 Feb 13 Mrz 13 Apr 13 Mai 13 Jun 13 Jul 13 Aug 13 Schroders Approach A return to variations in performance benefits our active approach 6Commodities | September 2013 Source: Schroders; Bloomberg S&P GSCI 1 year to August Cumulative total return % Precious MetalsEnergy AgricultureBase Metals 2007 Cumulative total return % Sector Performance: Winners and losers
  8. 8. 0 200 400 600 800 1'000 1'200 Nov 96 Jun 97 Jan 98 Aug 98 Mrz 99 Okt 99 Mai 00 Dez 00 Jul 01 Feb 02 Sep 02 Apr 03 Nov 03 Jun 04 Jan 05 Aug 05 Mrz 06 Okt 06 Mai 07 Dez 07 Jul 08 Feb 09 Sep 09 Apr 10 Nov 10 Jun 11 Jan 12 Aug 12 Mrz 13 -56% -30% -28% Schroders Approach CBOT Wheat: an example of the importance of timing 7Commodities | September 2013 Source: Datastream – 31 July 2013 CBOT Wheat CtperBushel
  9. 9. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Feb 06 Jul 06 Dez 06 Mai 07 Okt 07 Mrz 08 Aug 08 Jan 09 Jun 09 Nov 09 Apr 10 Sep 10 Feb 11 Jul 11 Dez 11 Mai 12 Okt 12 Mrz 13 Schroders Approach Historical allocations and active use of cash 8Commodities | September 2013 Source: Schroders – 28 June 2013 Metals Energy Agriculture Cash
  10. 10. -40 -20 0 20 40 60 80 100 120 140 FeederCattle Aluminium NaturalGas Coffee Zinc Wheat Lumber Sugar SoybeanOil KansasWheat Rice Canola HeatingOil GasOil Palladium Silver Nickel Cocoa OrangeJuice LiveCattle Lead Tin AzukiBeans Platinum Copper Gold Rubber Cotton Wool Brent WTI Oats Corn Soybeans Gasoline SoybeanMeal LeanHogs Schroders Approach 9Commodities | September 2013 Source: Schroders; Bloomberg Commodity Index Averages S&P GSCI +12.14% DJ UBS +5.57% Rogers +6.73% % A return to backwardation provides more opportunities
  11. 11. 85 90 95 100 105 110 Okt 13 Nov 13 Dez 13 Jan 14 Feb 14 Mrz 14 Apr 14 Mai 14 Jun 14 Jul 14 Aug 14 Sep 14 Okt 14 Nov 14 Dez 14 Jan 15 Feb 15 Mrz 15 Schroders Approach Position diversification 10Commodities | September 2013 Source: Schroders; Bloomberg S&P GSCI US$PerBarrel Current US WTI holdings: Optimal curve positioning Three contracts owned
  12. 12. Investment Outlook 11Commodities | September 2013
  13. 13. Investment outlook Global Environment 12Commodities | September 2013 Source: Source: Schroders; Thomson Datastream – 31 July 2013 Money supply growth (M2 – YoY) 0 5 10 15 20 25 30 35 0 2 4 6 8 10 12 0 2 4 6 8 10 12 2000 2002 2004 2006 2008 2010 2012 2014 US ChinaEurozone
  14. 14. 0 5'000 10'000 15'000 20'000 25'000 30'000 35'000 40'000 0 2'000 4'000 6'000 8'000 10'000 12'000 1995 1998 2001 2004 2007 2010 Investment outlook Energy: OPEC supply and OECD Demand 13Commodities | September 2013 Source: Datastream; Schroders – 15 May 2013 Iran Russia Libya Saudi Arabia Iraq OPEC Supply Thousands of barrels Millions of barrels 0 10'000 20'000 30'000 40'000 50'000 60'000 0 5'000 10'000 15'000 20'000 25'000 1996 1999 2002 2005 2008 2011 Product demand Japan Product demand US OECD Oil Demand Thousands of barrels Millions of barrels
  15. 15. OECD vs. Non OECD Oil Demand Oil Global Crude Oil Supply Demand Balance Investment outlook Oil 14Commodities | September 2013 Source: Energy Intelligence & Datastream – 30 August 2013 -8 -6 -4 -2 0 2 4 6 Q4 1997 Q2 1999 Q4 2000 Q2 2002 Q4 2003 Q2 2005 Q4 2006 Q2 2008 Q4 2009 Q2 2011 Q4 2012 20 25 30 35 40 45 50 55 2000 2002 2004 2006 2008 2010 2012 Mln/Barrels OECD Oil Demand Non OECD Oil Demand
  16. 16. Investment outlook Oil: Cost of Production vs. Current Account Balance 15Commodities | September 2013 Source: Total SA; Schroders; May 2012 120 100 80 60 40 20 0 0 5 10 15 20 25 30 35 40 45 0 10 30 Oil Majors Qatar Kuwait UAE Libya Libya Saudi Arabia Algeria Iraq Angola Nigeria Ecuador Iran Russia Venezuela Dollarsperbarrel Oil production (mb/d) Oil price required for current account balance Oil price required for oil majors: profitability Current account breakeven cost of production
  17. 17. Country 2012 (tonnes) 10 year change World Total 2700 4.6% China 370 93% Australia 250 -8% US 230 -23% Russia 205 22% SA 170 -57% Peru 165 5% Canada 102 -33% Indonesia 95 -33% Uzbekistan 90 0% Ghana 89 29% Mexico 87 314% Papua 60 -8% Brazil 56 17% Chile 45 15% Other 645 37% Global goldmine output Investment outlook 2012 Demand & Production trends 16Commodities | September 2013 Source: MEG, World Gold Council & U.S. Geological Survey, Mineral Commodity Summaries, January 2013 0 500 1'000 1'500 2'000 2'500 3'000 0 100 200 300 400 500 600 700 1988199019921994199619982000200220042006200820102012 South Africa United States Canada Australia China Tonnes World Global demand Country 2012 (tonnes) 1 year change World Total 4361 -4.8% Jewellery consumption 1,895.40 -4.0% Industrial & dental 407.5 -9.8% Investment 1,525.80 -10.2% Official sector purchases 533.2 16.7%
  18. 18. Investment outlook Gold: Know ETF holdings 17Commodities | September 2013 Source: Bloomberg 31 August 2013 0 10'000'000 20'000'000 30'000'000 40'000'000 50'000'000 60'000'000 70'000'000 80'000'000 90'000'000 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013 Troyounces
  19. 19. Investment outlook Gold as % of total reserves 18Commodities | September 2013 Source: World Gold Council – July 2013 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 0 1'000 2'000 3'000 4'000 5'000 6'000 7'000 8'000 9'000 Tonnes of Gold UnitedStates IMF Italy France China Switzerland Russia Japan Netherlands India ECB Taiwan Portugal Venezuela SaudiArabia UK Lebanon Spain Austria Belgium Algeria Philippines Libya Thailand Singapore Sweden SouthAfrica BIS Turkey Greece Mexico Romania Australia Poland Germany Tonnes of Gold % of Reserves
  20. 20. Investment outlook Total Chinese Gold Demand 19Commodities | September 2013 Source: CPM Group – 31 May 2012 0 5 10 15 20 25 30 35 40 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 (E) 2012 (F) MillionOunces Fabrication Demand Net Investment Demand
  21. 21. Investment outlook Gold and silver: Large corrections, long term opportunities 20Commodities | September 2013 Source: Datastream – 31 August 2013 0 10 20 30 40 50 60 2008 2009 2010 2011 2012 2013 2008 2009 2010 2011 2012 2013 500 700 900 1'100 1'300 1'500 1'700 1'900 2'100 US$ US$ Silver spot price 2008 - 2013 Gold spot price 2008 - 2013
  22. 22. 0 1'000 2'000 3'000 4'000 5'000 6'000 7'000 8'000 9'000 10'000 2001 2003 2005 2007 2009 2011 2013 Copper Nickel Zinc Investment outlook Price vs. marginal costs: 2001–2013 21Commodities | September 2013 Source: Datastream – 30 August 2013 0 5'000 10'000 15'000 20'000 25'000 30'000 35'000 40'000 45'000 50'000 55'000 2001 2003 2005 2007 2009 2011 2013 0 1'000 2'000 3'000 4'000 5'000 2001 2003 2005 2007 2009 2011 2013 USD per tonneUSD per tonneUSD per tonne = Marginal costs
  23. 23. 1500 2000 2500 3000 3500 4000 Dez 2010 Jun 2011 Dez 2011 Jun 2012 Dez 2012 Jun 2013 0 50 100 150 200 250 Dez 2010 Jun 2011 Dez 2011 Jun 2012 Dez 2012 Jun 2013 -60% 100 120 140 160 180 200 220 240 260 Dez 2010 Jun 2011 Dez 2011 Jun 2012 Dez 2012 Jun 2013 Coffee Cotton Investment outlook Agriculture 22Commodities | September 2013 Source: Datastream; Schroders – July 2013 Cocoa Sugar 15 17 19 21 23 25 27 29 31 33 35 Dez 2010 Jun 2011 Dez 2011 Jun 2012 Dez 2012 Jun 2013 -60% -60% -55%
  24. 24. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 0 10'000 20'000 30'000 40'000 50'000 60'000 70'000 80'000 90'000 100'000 1960/1961 1965/1966 1970/1971 1975/1976 1980/1981 1985/1986 1990/1991 1995/1996 2000/2001 2005/2006 2010/2011 Investment outlook World Cotton Ending Stocks vs. Stock-to-Use Ratio 23Commodities | September 2013 Source: USDA, Schroders ‘000 tonnes China Ending Stocks ROW Ending Stocks Stock-to-Use Ratio
  25. 25. “Rest of the World” Cotton Ending Stocks vs. Stock-to-Use Ratio Chinese vs. US Cotton Prices Investment outlook Large differentiation between China and rest of World 24Commodities | September 2013 Source: FAO – 28 June 2013 0.0 0.5 1.0 1.5 2.0 2.5 2002 2004 2006 2008 2010 2012 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0 5'000 10'000 15'000 20'000 25'000 30'000 35'000 40'000 45'000 1960/1961 1969/1970 1978/1979 1987/1988 1996/1997 2005/2006 USD/lb 82%
  26. 26. Sector weights vs benchmark^ Schroder AS Commodity Fund As at 31 July 2013 25Commodities | September 2013 Source: Schroders *Includes OTC Commodity Swaps and Physically Backed ETFs †Shown for comparison purposes only ^S&P Goldman Sachs CI TR; RJ CRB TR; DJ UBS Commodity TR; Rogers Int. Commodity TR Futures Equities Other* Total Exposure Benchmark† Difference Energy 49.0% Metals 20.7% Agriculture 28.7% Cash 1.5% TOTAL 88.1 2.3 8.1 100 100 0 Crude Oil 30.0 30.0 30.8 -1.3 Gas Oil 3.0 3.0 2.4 +0.6 Gasoline 5.2 5.2 4.4 +0.6 Heating Oil 4.7 4.7 4.2 +0.4 Natural Gas 5.2 1.2 6.2 6.1 +0.3 Aluminium 4.1 4.1 4.2 -0.1 Copper 4.8 4.8 4.9 -0.1 Gold 2.2 3.6 5.8 5.1 +0.6 Lead 0.4 0.4 0.6 -0.2 Nickel 1.3 1.3 1.1 +0.2 Palladium 0.1 -0.1 Platinum 0.5 -0.5 Silver 0.7 1.1 1.8 1.5 +0.3 Tin 1.2 1.2 0.3 +0.9 Zinc 1.4 1.4 1.3 +0.1 Cocoa 1.3 1.1 2.3 1.6 +0.8 Corn 4.9 4.9 5.3 -0.1 Coffee 2.3 2.3 2.4 -0.1 Cotton 0.7 2.7 3.3 3.1 +0.2 Feeder Cattle 0.1 -0.1 Lean Hogs 1.1 1.1 1.6 -0.3 Live Cattle 2.4 2.4 3.5 -1.1 Lumber 0.3 -0.3 Oats 0.1 -0.1 Orange Juice 0.4 0.4 0.4 0.0 Rapeseed 0.3 -0.3 Rough Rice 0.2 -0.2 Soybeans 3.8 3.8 4.4 -0.5 Soybean Meal 0.9 0.9 0.9 0.0 Soybean Oil 0.3 0.3 1.2 -0.8 Sugar 2.6 0.7 3.3 3.1 +0.3 Wheat 3.6 3.6 4.1 -0.4 Cash 1.5 Agriculture 28.7% Energy 49.0% Metals 20.7% 1.5 -3.3 1.2 0.5 -4 -3 -2 -1 0 1 2 Cash Agriculture Metals Energy Cash 1.5%
  27. 27. Schroder AS Commodity Fund A strong long term track record : October 2005 – August 2013 26Commodities | September 2013 *I Shares Gross daily NAV to NAV **Inception 31 October 2005 ^For performance comparison purposes only Source: Schroders; Bloomberg; Reuters/Jefferies; S&P Goldman Sachs; Dow Jones; Diapason USD % 2005** 2006 2007 2008 2009 2010 2011 2012 2013 YTD Schroder AS Commodity Fund* 3.00 18.62 34.73 -35.29 34.03 15.36 -6.04 0.11 -3.79 Average of all 4 Indices^ 3.04 -3.36 25.19 -39.65 20.57 15.63 -7.46 -0.51 -1.42 S&P Goldman Sachs CI TR -1.09 -15.09 32.67 -46.49 13.49 9.03 -1.18 0.07 +2.58 RJ CRB TR 5.60 -2.85 22.15 -35.04 23.65 17.60 -8.21 -3.28 -1.26 DJ UBS Commodity TR 3.45 2.07 16.23 -35.65 18.91 16.83 -13.32 -1.05 -6.16 Rogers Int. Commodity TR 4.24 3.05 30.01 -41.35 26.23 19.01 -6.93 2.02 -0.83 USD % Since Inception** Cumulative Total Return Annual Rate of Return Volatility Sharpe Ratio Schroder AS Commodity Fund* 49.11 5.29 18.68 0.26 Average of all 4 Indices^ -4.82 -0.64 20.78 -0.02 S&P Goldman Sachs CI TR -25.15 -3.67 24.49 -0.11 RJ CRB TR 3.76 0.48 19.58 0.03 DJ UBS Commodity TR -11.70 -1.59 19.15 -0.09 Rogers Int. Commodity TR 15.88 1.92 21.32 0.11
  28. 28. A lower risk, more liquid, more transparent, higher return strategy Why Schroders for commodities A successful approach to active commodity management  Long only and no leverage  Daily liquidity  Cash and collateral kept in US T-Bills  Simple instruments used to gain exposure (no complicated derivatives)  Multiple currency hedged share classes available 27Commodities | September 2013 A simple, research driven approach, with in-depth fundamental analysis at its cornerstone:
  29. 29. Appendix 28Commodities | September 2013
  30. 30. People Investment team and resources 29Commodities | September 2013 Data as at 29 February 2012 Agriculture Geoff Blanning Head of EMD Implementation Cash Management  Christopher Smith  Ryan Dann  Lee Clapton Product Management  Christopher Wyke  Matthew Michael  Nichola Bellini  Fiona Petrie  Lucy Kelly Rob Howell Head of Commodities, Energy and Metals Paula Bujia Rodolphe Roche ENERGY METALS AGRICULTURE ECONOMICS ANALYSTS Risk Management Team Quantitative Analysis  Margaret Ismond  Oscar Agra Sentiment Analysis  Malcolm Melville  Oscar Agra Simon Hodges Head of Trading and Implementation Equity Analyst/ Precious Metals
  31. 31. Investment process Market analysis 30Commodities | September 2013 Asset Allocation Portfolio Construction Risk Control Market Analysis Commodity Analysis (“Bottom Up”) Global Conditions (“Top Down”)
  32. 32. Investment process Commodity analysis 31Commodities | July 2013 Investment Summary Risk Model Commodity AnalysisWeekly Demand/Supply AnalysisFundamental Chart Analysis Consensus Views Quantitative Technical Sentiment
  33. 33. Liquidity-based diversification and exposure limits Portfolio construction Our diversification limits are a significant part of our risk control 32Commodities | September 2013 Source: Schroders as at March 2012 Please note that such limits are internal and may be subject to change without notice RISK CONTROL DIVERSIFICATION RULES Min Max Sector Energy 20% 60% Agriculture 20% 60% Metals 20% 60% Commodity Tier I 20% Tier II 10% Tier III 5% Asset Type Swaps/ETFs/Futures 50% 100% Equity 0% 25% Cash 0% 33% RISK CONTROL COMMODITY LIMITS Tier I (max 20%) Tier II (max 10%) Tier III (max 5%) WTI Crude* Nickel Tin Brent Crude* Zinc Lean Hogs Gasoline Silver Cocoa Heating Oil Corn Feeder Cattle Gas Oil Live Cattle Palm Oil Copper Wheat Platinum Aluminium Coffee Rubber Gold Cotton Orange Juice Lead Rice Natural Gas Ethanol Soybeans Canola Soybean Oil Oats Soybean Meal Sugar *Maximum exposure to crude oil = 30% ANY OTHER TOTAL Tier I: 100% TOTAL Tier II: 50% TOTAL Tier III: 25%
  34. 34. The Team 33 Geoff Blanning, Head of EMD • Head of Emerging Markets Debt since December 1998, member of the Group Management Committee and responsible for Asian country analysis and selection. • Geoff also developed Schroders Commodity, Currency and Wealth Preservation investment businesses. • Investment career commenced in 1985. Managed Global Bond Funds at NM Rothschild's & Bankers Trust before developing Morgan Grenfell's first Emerging Market Debt Fund in 1993. Robert Howell, Head of Commodities, • Head of Commodities and Fund Manager for the Schroder Commodity strategy since its inception in 2005. • Rob is responsible for analysing the energy and metal sectors. • Joined Schroders in 1998 as a currency dealer, then assumed responsibility for Emerging Market Debt trading in 2000 and in 2004 was made responsible for the group’s commodity analysis. • Investment career commenced in 1995 at Allied Irish Bank Plc. Rodolphe Roche, Fund Manager • Fund Manager for the Schroder Commodity strategy since its inception in 2005, is responsible for analysing the agriculture sector and manages the SAS Agriculture fund. • Rodolphe is also responsible for creating commodity quantitative models. • Investment career commenced in 2001 when he joined Plantureux SA (Agriculture Brokerage Co.) Paula Bujia, Fund Manager • Fund Manager for the Schroder Commodity strategy and joined the commodity team in 2008. • Is responsible for analysing the precious metal and commodity equity sectors, as well as managing the SAS Gold and Precious metals fund. • Investment career commenced in 1995 when she joined Caspian Securities. Christopher Wyke Product Manager • Joined Schroders in 2000 and is responsible for the product management of EMD, Commodities & Currencies. • Investment career commenced in 1981 when he joined Rothschild Asset Management.
  35. 35. The views and opinions contained herein are those of the Schroders Commodity Team, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. Schroder Alternative Solutions (the “Company”) may not be sold in the United States nor to Citizens or residents of the United States. Risk warning: Indirect investment in commodities may cause the fund to face market risk from the value of the underlying asset together with geopolitical, supply, currency exchange rate and interest rate risks. Important Information: This presentation does not constitute an offer to anyone, or a solicitation by anyone, to subscribe for shares of Schroder Alternative Solutions (the “Company”). Nothing in this presentation should be construed as advice and is therefore not a recommendation to buy or sell shares. The offering of shares in certain jurisdictions may be restricted and accordingly persons are required, by the Company, to inform themselves of and observe any such restrictions. Applications for shares of the Company can only be made on the basis of the current prospectus together with the latest audited annual report and subsequent unaudited semi-annual report, if published, copies of which can be obtained, free of charge, from Schroder Investment Management (Luxembourg) S.A. Past performance is not a reliable indicator of future results, prices of shares and the income from them may fall as well as rise and investors may not get back the amount originally invested. Investments in alternative investments involve a high degree of risk. Third party data is owned or licensed by the data provider and may not be reproduced or extracted and used for any other purpose without the data provider's consent. Third party data is provided without any warranties of any kind. The data provider and issuer of the document shall have no liability in connection with the third party data. The Prospectus and/or www.schroders.com contains additional disclaimers which apply to the third party data. FTSE International Limited (“FTSE”) © FTSE 2011. FTSE®” is a trade mark of London Stock Exchange Plc and The Financial Times Limited and is used by FTSE International Limited under licence. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent. This presentation is issued by Schroder Investment Management Limited, 31, Gresham Street, EC2V 7QA, who is authorised and regulated by the Financial Services Authority. This presentation may not be distributed to any unauthorised persons. For your security, communications may be recorded. Important information 34Commodities | September 2013

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