Introduction Investors have traditionally exposed their investment portfolios to a range of asset classes, including equity, fi xed interest and property, in a bid to outperform major market averages and achieve uncorrelated returns in asset classes. Some sophisticated investors may also have ventured into the likes of private equity, venture capital and hedge funds. However, there is still a gap in the investor s toolkit. This takes the form of exposure to more aggressive strategies that provide enhanced equity-like returns but with different risk characteristics. Banks and other global fi nancial institutions have used these more aggressive strategies to generate super profi ts, often generating greater returns than their traditional businesses. Product Description AG Capital has established a hedge fund called the AG Capital (hereon referred to as The ). The is made up of a selection of on average seven investment managers, each of whom have multiple strategies and separate focusses. These strategies are primarily directional which employ high net exposure, but could include long-short equity strategies which employ low or zero net exposure, as well as corporate action strategies and strategies benefi ting from distressed securities. AG Capital manages The by allocating the capital to designated investment managers operating in our various offi ces around the country. Every investor s capital is managed alongside the investment manager s own capital, according to their specifi c strategy. is a certified financial services provider.
Product Benefits The inclusion of an active alternative strategy in a client s investment portfolio presents numerous advantages when designing a holistic investment strategy. The offers the following benefi ts: 1. High Returns From A More Aggressive Strategy While the risk is higher than an equivalent equity investment, the risk / reward relationship offered by The can be far more attractive. 2. Low Correlation It has been quantitatively assessed that individual investment managers portfolios show little correlation between one another or with conventional investment strategies. A collection of investment managers can thus perform well in all market conditions, irrespective of the direction of the market. 3. More Flexibility Exposure to a greater variety of investment strategies within The is highly attractive and supports the uncorrelated prospects of the product, while at the same time giving clients the opportunity to make money in all kinds of market conditions. 4. Developing And Attracting Top Quality Investment Managers Investment managers are not paid salaries and are only remunerated when they make money. Because of this, unsuccessful investment managers fall by the wayside, leaving us with a group of investment managers that we back, but more importantly who back themselves, to make money. Furthermore, remuneration structures skewed towards performance often attract top tier investment managers, both in banks and other funds. A fund with the appropriate remuneration structure and capital base will go a long way to secure a pipeline of best of breed investment managers. AG Capital is not only focused on building a unique product, but also a product that all investment managers aspire to be part of. 5. Alignment With Investment Managers Personal Interest The investment managers also have an increased incentive to perform well as their own capital is managed alongside The. Furthermore, the investment managers receive a carry on the money they manage on behalf of The. 6. Risk Mitigation Through Diversification Risk is reduced as a result of numerous investment managers generating uncorrelated returns by applying diverse strategies and unique styles within The. is a certified financial services provider.
Our Investment Managers Finding quality people to work with has been the most important factor in our growth and success. Our selection process has yielded many talented investment managers and we continuously select and train new recruits who we believe will be integral to our success moving forward. We invest time and money in training investment managers, yet only the best of the best of these qualify to manage money within The. Our selection process for investment managers is as follows: 1. Experience: Investment managers must have a minimum of three years active investment management experience. 2. Allocation: Investment managers must have a minimum of one year auditable track record in investment management over the past 12 month period. Returns for the 12 month period must exceed the benchmark (cash + 3%). If returns for the preceding 12 month period do not beat the benchmark, auditable returns for the previous 12 months need to be produced and motivation given for why returns did not beat the benchmark. Investment managers need to invest personal capital which is managed alongside the capital allocation. 3. Reallocation: Flexibility in reallocation is important to the success of this product. As managers, teachers and mentors to our investment team, we are familiar with their strategies, style and fl are. We believe our input in adjusting allocation to investment managers based on the following criteria is vital: Current streaks; Market conditions (certain strategies and styles suit certain market conditions); Sector specifi c skills. 4. Consistency: The ability to make money on a continual basis. is a certified financial services provider.
The Allocation Process The allocation process ensures the key ingredient to the success of The Prosperitas Fund: allowing investment managers to continue managing their own capital, side by side with the capital, without altering their unique strategies and styles. The process is as follows: Allocation of The capital to an individual investment manager is decided by the Investment Committee; The capital is managed collectively with each investment manager s personal capital; An automated allocation process takes place allocating trades between The and the portfolio managers accounts based on a ratio of capital invested. Having a seamless allocation process between the investment managers CFD accounts and The will ensure the following: Management styles remain consistent; The negative psychological effect of managing third part capital is mitigated; Any costs incurred in managing the money will be shared proportionally; Investment managers are incentivised to make money as their personal wealth is on the line (as well as the incentive of a profi t share in the Prosperitas capital allocated to them). Target Investor And Product Aim The was specifi cally designed to attract investments from High Net Worth investors. The risk and return profi les are higher than could be expected from an alternative strategy or a traditional equity long only investment manager. We aim to provide the ability to earn superior returns for investors. A small allocation of one s investable portfolio can result in enhanced profi ts, giving a kicker to often sedentary investment portfolios. is a certified financial services provider.
The Fee Structure The charges management and performance fees. The following fee structure: Management Fee: 1% p.a. Performance Fee: 20% Hurdle: Cash +3% High Watermark: Applicable A Hurdle Rate is the amount chosen by the investment manager that triggers the payment of performance fees. For most funds the performance fees are only payable for performance over and above the hurdle rate, which is typically a benchmarked rate. A High Watermark fi xes the level an individual fund has reached when a performance related fee was last paid. New performance fees will only be paid for performance above the previous high watermark. The Relevant Parties Key Parties Product Owner Investor Independent Administrator Compliance Officer Prime Broker Investment Managers is a Financial Services Provider registered with the Financial Services Board (FSP no. 43325). AG is responsible for product creation and management. will be sole distributer to high net worth private clients (professional investors). Maitland will administer investments and withdrawals, valuations, fee calculations and reporting. makes use of external compliance offi cers in the form of Moonstone Compliance (Pty) Ltd. is the appointed broker to The. Approximately seven investment managers. Reg. No: 2010 / 012989 / 07 VAT Number : 4 320 260 716 AG Capital is a certified Financial Services Provider. FSP number 43325. This document and its contents are confidential, privileged and only for the intended recipient. make no representations or warranties in respect of this report or its contents and will not be liable for any loss or damage of any nature arising from this report, the content thereof, your reliance thereon its unauthorised use or any electronic viruses associated therewith. This report is proprietary to AG Capital (Pty) and you may not copy or distribute the report without prior written consent of the authors. AG Capital shall not be deemed to have (i) made any recommendation to the Client, (ii) advise the Client on the merits of any Contract or (iii) assess the suitability of any Contract for the Client or its Underlying Clients and AG Capital will not assume any liability in this respect. AG Capital is entitled to assume that the Client has sufficient experience and knowledge to understand the risks involved in each Contract it enters into.