36ONE Target Return Fund

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3 1997 Initial team joined HSBC 1999 Moved to Investec December 2004 Formation of 36ONE Asset Management September ONE MET Flexible Opportunity Fund 36ONE Target Return Fund April ONE Hedge Fund May ONE Offshore Portfolio December ONE Fund July ONE MET Equity Fund May ONE Hedge Portfolio 3

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5 Long Only: R5.4bn ($510m) Hedge Funds: R7bn ($670m) Unit Trusts (R4.3bn) Segregated (R1.1bn) Funds - Local (R4.5bn) Funds - Offshore (R2.1bn) Segregated - Local (R0.4bn) Total Assets: R12.4bn ($1.2bn) Hedge Funds (R7bn) Long Only (R5.4bn) As at 30 April

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8 Experience Qualifications Recruitment Average experience of 15 years in financial services and 10 years in asset management and research Previous employers include Grant Thornton HSBC Investec Accenture Credit Suisse Momentum Asset Mgmt Newton Investment Management (London) Diverse range of academic backgrounds and professional qualifications Professional and business qualifications include CFA (x4) CA (x3) CAIA (x2) MBA FIA MFin Highly selective recruitment policy Majority of team members were headhunted Over the last five years, an average of only one offer was made per year Permanent staff are only appointed for core business functions Peripheral functions are outsourced Incentives Work Environment Tenure All team members receive modest base salary Majority of compensation derived from bonuses Bonuses are linked to fund performance Bonuses are paid quarterly Flat structure No hierarchy, job titles or committees Small, open plan office to encourage information sharing Average tenure of 5 years 36ONE has had only one resignation since inception Individual left financial services industry 8

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10 The market does not efficiently price securities at all times Stock selection through bottom-up fundamental analysis can outperform over time Risk management is facilitated through monitoring of exposures Macro analysis overlay used to support/contradict bottom-up thesis and manage exposure Focus is value while attractive growth opportunities are explored Invest in all sectors as well as across the range of large, mid and small cap shares Focus on core competency, peripheral functions outsourced 10

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12 Business opportunity We analyse the earnings and cash generating capabilities of a business given its available capital The business is analysed from the bottom up We research the service/product offered, the demand in the market, the company s pricing power, its ability to control costs and the firm s funding structure Regular meetings with company management Quality of management team is key to our investment decision The macro setting the business operates in is also considered We use macro analysis mainly to strengthen/weaken the bottom up company analysis rather than as an independent tool for company selection Business risk Business risk relates to outcomes that would adversely affect the company s earnings, cash flow and return on capital measures The sources of business risk are analysed. Among the main items considered are: Compromised revenue streams Costs escalating out of control Inefficient use of capital Revenue streams may be compromised for a number of reasons. Examples include market demand changes, competition, regulation An understanding of how much of a threat cost escalation presents is derived from understanding the cost items in detail For example, availability of supply, sensitivity to exchange rates Inefficient use of capital arises predominantly from management inefficiency This is why management monitoring is an integral part of our investment process 12

13 Analysis happens as an ongoing interactive process between the entire investment team In other words this is not a stop/start process punctuated by numerous investment meetings Open plan office with continuous discussion on each step of the analysis process Analysis and trading functions are combined and buy/sell results of team discussion are implemented with no lag Portfolios and positions are monitored in real time, adjustments are made as necessary This forms the core of our risk management process as we continually monitor and adjust individual and sector exposures Good ideas at the wrong price are also continuously monitored for the correct entry point 13

14 Owner managed Passion, motivation, experience Quick to seize opportunities and mitigate risks High conviction approach to portfolio management Flexible style Rigorous internal analysis Proprietary models Availability of multiple sources of third party research Access to senior management Team dynamics Sustainable business with strong infrastructure 14

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17 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Source: Bloomberg, IDS 19.2% 36ONE MET Flexible Opportunity Fund Total return over 3 years to 30 April % 63.3% Inflation Cash JSE All Share Index Total Return 87.5% 36ONE MET Flexible Opportunity Fund 17

18 Aug 2005 Nov 2005 Feb 2006 May 2006 Aug 2006 Nov 2006 Feb 2007 May 2007 Aug 2007 Nov 2007 Feb 2008 May 2008 Aug 2008 Nov 2008 Feb 2009 May 2009 Aug 2009 Nov 2009 Feb 2010 May 2010 Aug 2010 Nov 2010 Feb 2011 May 2011 Aug 2011 Nov 2011 Feb 2012 May 2012 Aug 2012 Nov 2012 Feb 2013 May 2013 Aug 2013 Nov 2013 Feb % 400% 350% 300% 250% 200% 150% 100% 50% 0% Return p.a. since inception (Sep 05) Return 12M Return YTD (April) Volatility p.a.* 36ONE MET Flexible Opportunity Fund (R2.4bn) FTSE/JSE All Share Total Return 21.0% 21.2% 0.9% 14.2% 17.6% 30.1% 7.1% 16.4% *Annualised standard deviation of monthly returns. Source: Metropolitan, Bloomberg 18

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20 36ONE MET Equity Fund Total return since inception (1 July April 2014) 70% 60% 50% 51.6% 61.0% 40% 30% 20% 10% 12.1% 8.5% 0% Source: Bloomberg, IDS Inflation Cash SWIX Index Total Return 36ONE MET Equity Fund 20

21 Jun 2012 Aug 2012 Oct 2012 Dec 2012 Feb 2013 Apr 2013 Jun 2013 Aug 2013 Oct 2013 Dec 2013 Feb 2014 Apr % 60% 50% 40% 30% 20% 10% 0% Return p.a. since inception (Jul 12) Return 12M Return YTD (April) Volatility p.a.* 36ONE MET Equity Fund (R1.9bn) 29.7% 27.9% 2.3% 8.7% FTSE/JSE SWIX Total Return 25.5% 28.5% 6.4% 9.7% *Annualised standard deviation of monthly returns. Source: Metropolitan, Bloomberg 21

22 Disclaimer Investors should take cognisance of the fact that there are risks involved in buying or selling any financial product, and past performance of a financial product is not necessarily indicative of the future performance. The value of financial products can increase as well as decrease over time, depending on the value of the underlying securities and market conditions. 36ONE Asset Management (Pty) Ltd is an authorised financial services provider with the FSB. Hedge Funds are presently not regulated by the Financial Services Board, and do not comply with the provisions of the Collective Investments Schemes Control Act Number 45 of Therefore Hedge Funds are private investments suitable only for sophisticated investors, and are not open to the general public. This document does not constitute a solicitation, invitation or investment recommendation, and prior to selecting a financial product or fund it is recommended that investors seek specialised financial, legal and tax advice. 22