DIVERSIFIED ALTERNATIVES
Contents Introduction Investment philosophy Economic themes Investment process Key characteristics Key risks and how they are mitigated Diversified s STANLIB Multi-Manager Diversified STANLIB Multi-Manager Global (ex-africa) STANLIB Multi-Manager Africa (ex-) STANLIB Multi-Manager STANLIB Multi-Manager Multi-Strategy Retail Hedge Fund Investment team More information Disclaimer 1 2 3 4 5 5 6 6 7 8 9 10 11 11 12 MULTI-MANAGER
STANLIB Multi-Manager Diversified An opportunity to invest differently. You can earn attractive long-term returns by investing in assets like infrastructure, private equity, agri-business, private debt and real estate. But how do you access them? Access to alternatives without the usual hurdles. These are complex assets. Corporate governance has to be monitored. They need large minimum investments. On a small scale, they are costly. Only large professional managers, using an open-ended investment vehicle, can provide liquidity. STANLIB Multi-Manager s Diversified capability provides qualified investors with a simplified, single-entry access point into a wide range of alternative assets. Diversified 3-month liquidity R1 000 000 minimum SA CPI+5% after fees Global (ex-africa) Africa (ex-sa) Multi-Strategy Retail Hedge Fund 3-month liquidity $200 000 minimum US cash+4% after fees 3-month liquidity $200 000 minimum US CPI+6% after fees 3-month liquidity R1 000 000 minimum SA CPI+6% after fees Daily liquidity R50 000 minimum SA cash+3% after fees Each individual proposition is also accessible to qualified investors, depending on jurisdiction. PAGE 1
Investment philosophy We want to give investors easier access to quality, complementary private market investments that are managed professionally. We believe the investments we have selected after careful research will complement a diversified investment portfolio. The investments we make are: RELEVANT We identify long-term themes that should drive above-average investment returns. These themes focus on unmet needs that reward capital investment. REPEATABLE Where we invest, we intend to create mutually beneficial, repeatable relationships. That will allow us to make additional investments and build up our co-operation with all stakeholders which should result in long-term benefits. RESPONSIBLE Being a good global corporate citizen is not only the right thing to do, but it is also sustainable business and good investment. Our investments create returns that are: Sustainable Our investments target the triple bottom line: we aim to achieve the highest social, environmental and financial standards. All three are essential to generate long-term sustainable returns. Complementary Our investments are unconventional. These are opportunities that are hard to access. For example, we can invest in large infrastructure projects. We can take a long-term view on new developments or relatively small projects, which are rarely found listed on stock exchanges. Reliable Individual investments of this nature can be risky but we manage risk at portfolio and underlying fund level to deliver reliable returns. For example, we manage risk through robust contracting and governance. More information on mitigating risk can be found in the following pages. PAGE 2
Economic themes We have identified global themes around unmet fundamental economic needs with the potential for superior long-term investment returns. The following fundamental economic themes guide our investment choices: Essentials Food, water, security. Social needs Education and healthcare. Connectivity Roads, transport and logistics, telecommunications, internet. Fundamental economic principles Societal shifts Urbanisation, rising middle class, demographic dividend. Inclusivity Empowerment, localisation, financial inclusion. These themes are accessed by investing in a diversified spread of underlying alternative investments such as: REAL ESTATE Supporting urbanisation and social needs by building offices, apartments, hospitals, schools and retail centres. SMALL AND MEDIUM ENTERPRISES Building and growing private entrepreneurial companies in manufacturing, logistics and services. INFRASTRUCTURE ASSETS Meeting basic needs for renewable energy, roads and bridges, airports and fibre optic pipelines. DIVERSIFIED LIQUID ASSETS Hedge funds, listed private equity and fixed interest will provide liquidity while keeping the portfolio fully invested. PAGE 3
Investment process Portfolio review Portfolio specification 6 1 Portfolio management 5 Investment Process 2 Asset allocation 4 3 Portfolio construction Manager research 1 Setting the portfolio mandate. This is the first step. It includes the benchmark, fees, investment limits and other qualitative objectives. 4 We intend to diversify our investments to mitigate concentration risk. During the portfolio construction stage, the emphasis is on making the right size of investment and timing it according to the managers fundraising cycle. 2 3 We follow a thematic process to identify opportunities that will benefit from a tailwind over the next 10 to 20 years. We will set targets for sectors and asset classes. To ensure we have a thorough understanding of the risk and correlation of different opportunities, we will assess the fundamental drivers of returns. We have sought out managers that offer funds within our target universe. 5 Our investment team engages with underlying managers on an ongoing basis. Ongoing portfolio management also includes managing liquidity so we can meet drawdowns and distributions. We have developed specialist skills to optimise portfolio returns through liquidity management because we are using open-ended structures. The manager selection process also includes operational due diligence and legal contracting. 6 On a quarterly basis we report to clients on key portfolio developments, portfolio performance, updated portfolio strategy for future allocations and adherence to mandate guidelines. PAGE 4
Key characteristics Low correlation to traditional investment strategies. Benefit from differing return behaviour in various market cycles. Asset type, geographies, managers and vintages. DIVERSIFICATION FUND FOCUS LINK TO REAL ECONOMIC BEHAVIOUR Targeting fundamental economic needs. Low market price volatility. Strong focus on social, governance and environmental factors. SOCIAL RESPONSIBILITY RETURN ENHANCEMENT Unique nature of investment. Access to broader investment opportunities with higher return potential. Key risks and how they are mitigated The primary risks are concentration and liquidity. Indirectly the portfolio is exposed to a slowdown in global growth but it is less vulnerable to market sentiment than listed instruments. Credit Operational Regulatory Concentration Liquidity Arising from exposures to counterparties Failure of systems and/or personnel may result in losses Future regulatory changes (for example legal, tax) could occur and may adversely affect the fund Generally there are few good alternative equity opportunities Some of the underlying instruments may be illiquid Market Interest rates Currency General movements in financial markets As a result of changes in the yield curve and other interest rate relationships Some of the underlying positions may be exposed to exchange rate fluctuations We manage risks in several ways. We diligently structure private investments to include protection clauses for investors. Our underlying assets and their offtake agreements offer security. Most important, we offset concentration by diversifiying. Because underlying investments are large and require significant minimum investments, concentration risk can only be reduced through managing a portfolio of at least R1 billion. For example, the minimum investment size of a private market fund can be as high as R100 million and that gives investors exposure to only a handful of investments. So we believe it is essential that the portfolio is diversified across multiple funds, managers, asset classes, sectors and vintages. We are able to deliver this to investors from the outset because our portfolios are seeded with high quality assets accumulated over the past six years. PAGE 5
STANLIB Multi-Manager Diversified Global (ex-africa) Africa (ex-sa) Diversified Multi-Strategy Retail Hedge Fund This proposition offers a complete alternatives solution that is easy to access, designed with the investor in mind. It is attractive to investors seeking strategies that are fundamentally different from traditional investment strategies. The proposition aims to diversify across managers and alternative asset classes by actively allocating to all four of the underlying building blocks. Fund Name Domicile Currency Legal Structure STANLIB Multi-Manager NCIS Qualified Fund of Hedge Funds Rand CIS (QFoHF) The fund may not be available for distribution in certain jurisdictions. Investor profile Asset classes Diversified private assets (equity and debt) in real estate, small and medium enterprises, and infrastructure assets. Diversified liquidity strategies such as hedge funds or listed private equity. Risk profile Conservative conservative Moderate aggressive Aggressive Qualified investors looking for a single-entry global proposition for alternatives and typically with an investment horizon longer than five years. DIVERSIFICATION FUND FOCUS LINK TO REAL ECONOMIC BEHAVIOUR Fund details Return objective Liquidity Minimum investment amount Minimum subsequent investment amounts Service fees p.a. (ex VAT) 1% Access method Exceed SA CPI+5%, net of fees 3 months R1 million R100 000 Directly from Novare CIS SOCIAL RESPONSIBILITY RETURN ENHANCEMENT Exit charges will apply on early withdrawals (i.e. the first three years) from the fund. For full fee disclosure, please see the fact sheet on. Please refer to the fund fact sheet or contact the team for information on current holdings, full fee disclosure and performance. PAGE 6
STANLIB Multi-Manager Global (ex-africa) Diversified This proposition is attractive for global investors that may already be invested in some of the mainstream opportunities, but who are looking for a supplemental allocation that behaves differently from their existing portfolios. Global (ex-africa) Africa (ex-sa) Multi-Strategy Retail Hedge Fund Non-traditional or alternative investments are difficult to select, invest in and monitor. Asset classes Fund name Domicile Currency STANLIB Multi-Manager Global Fund Ireland US dollar Diversified private assets (equity and debt) in real estate, small and medium enterprises, and infrastructure assets. Diversified liquidity strategies such as hedge funds or listed private equity. Legal structure ICAV Risk profile The fund may not be available for distribution in certain jurisdictions. Investor profile Conservative conservative Moderate aggressive Aggressive Qualified investors looking for exposure outside Africa and typically with an investment horizon longer than five years. Fund details Return objective Liquidity Exceed US Libor +4%, net of fees 3 months DIVERSIFICATION FUND FOCUS LINK TO REAL ECONOMIC BEHAVIOUR Minimum investment amount US$200 000 Minimum subsequent investment amounts Service fees p.a. (ex VAT) 1% Access method US$10 000 Directly from State Street SOCIAL RESPONSIBILITY RETURN ENHANCEMENT Exit charges will apply on early withdrawals (i.e. the first three years) from the fund. For full fee disclosure, please see the fact sheet on. Please refer to the fund fact sheet or contact the team for information on current holdings, full fee disclosure and performance. PAGE 7
STANLIB Multi-Manager Africa (ex-) Global (ex-africa) Fund name Domicile Africa (ex-sa) Diversified STANLIB Multi-Manager Africa Fund Ireland Multi-Strategy Retail Hedge Fund We have identified attractive growth opportunities for enhanced returns in Africa. However, traditional markets in many African countries and sectors are not established enough to provide exposure to these opportunities, and are therefore more difficult to access. Investing in these diverse and developing opportunities in Africa requires the skills and capabilities of a professional team. We are well placed to overcome these hurdles and provide you with dynamic access. Asset classes Currency Legal structure US dollar ICAV Diversified private assets (equity and debt) in real estate, small and medium enterprises, and infrastructure assets. The fund may not be available for distribution in certain jurisdictions. Risk profile Investor profile Qualified investors looking for exposure within Africa but outside, and typically with an investment horizon longer than five years. Conservative Fund details conservative Moderate aggressive Aggressive DIVERSIFICATION SOCIAL RESPONSIBILITY FUND FOCUS LINK TO REAL ECONOMIC BEHAVIOUR RETURN ENHANCEMENT Return objective Liquidity Exceed US CPI+6%, net of fees 3 months Minimum investment amount US$200 000 Minimum subsequent investment amounts Service fees p.a. (ex VAT) 1% Access method US$10 000 Directly from State Street Exit charges will apply on early withdrawals (i.e. the first three years) from the fund. For full fee disclosure, please see the fact sheet on. Please refer to the fund fact sheet or contact the team for information on current holdings, full fee disclosure and performance. PAGE 8
STANLIB Multi-Manager Global (ex-africa) Fund name Domicile Currency Africa (ex-sa) Diversified Multi-Strategy Retail Hedge Fund STANLIB Multi-Manager NCIS Qualified Hedge Fund Rand The n economy is developing new pockets of excellence, but these emerging companies and sectors are underrepresented in mainstream investment markets as they are typically specialised, smaller or unlisted. This growth is specific to the development needs of South Africa and can deliver rewarding returns. The STANLIB Multi-Manager provides investors with reach, expertise, a track record and a network. Asset classes Diversified private assets (equity and debt) in real estate, small and medium enterprises, and infrastructure assets. Legal structure Qualified Investor Hedge Fund (QIHF) Risk profile The fund may not be available for distribution in certain jurisdictions. Investor profile Conservative conservative Moderate aggressive Aggressive Qualified investors looking for -specific alternatives, and typically with an investment horizon longer than five years. Fund details Return objective Liquidity Exceed SA CPI +6%, net of fees 3 months DIVERSIFICATION FUND FOCUS LINK TO REAL ECONOMIC BEHAVIOUR Minimum investment amount R1 000 000 Minimum subsequent investment amounts Service fees p.a. (ex VAT) 1% Access method R100 000 Directly from Novare CIS SOCIAL RESPONSIBILITY RETURN ENHANCEMENT Exit charges will apply on early withdrawals (i.e. the first three years) from the fund. For full fee disclosure, please see the fact sheet on. Please refer to the fund fact sheet or contact the team for information on current holdings, full fee disclosure and performance. PAGE 9
STANLIB Multi-Manager Multi-Strategy Retail Hedge Fund Global (ex-africa) Fund name Domicile Currency Legal structure Africa (ex-sa) Diversified Multi-Strategy Retail Hedge Fund The fund may not be available for distribution in certain jurisdictions. Investor profile STANLIB Multi-Manager NCIS Multi-Strategy Retail Hedge Fund Rand Retail Investor Hedge Fund (RIHF) All (retail and qualified) investors aiming for consistent absolute returns with low volatility, seeking to diversify across managers and hedge fund strategies, and with an investment horizon longer than a year. Including a hedge fund in an investment portfolio can be a good way to reduce the volatility of returns over various market cycles and create a more stable and consistent return over the long term. This proposition aims to preserve capital over a 12-month rolling period, while targeting an annualised return of cash +3% over a 3-year rolling period. Its volatility is expected to be less than the FTSE/JSE All Bond Index (ALBI). Asset classes Hedge funds in multiple strategies. Participatory interest in other CIS s and managers. Risk profile Conservative Fund details conservative Moderate aggressive Aggressive Return objective Meet STEFI Call Index +3% Liquidity Daily DIVERSIFICATION FUND FOCUS LINK TO REAL ECONOMIC BEHAVIOUR Minimum investment amount R50 000 Minimum subsequent investment amounts R1 000 Service fees p.a. (ex VAT) 1.70% Access method Directly from the Manco or via the STANLIB Platform. SOCIAL RESPONSIBILITY RETURN ENHANCEMENT No exit charges will apply under the fund. Please refer to the fund fact sheet or contact the team for information on current holdings, full fee disclosure and performance. PAGE 10
Investment team STANLIB Multi-Manager s skilled investment team has extensive experience in selecting and combining a range of funds and asset classes. An important point to emphasise is how we have organised ourselves as a team for collective decision making. This is core to our business. We believe in leveraging the collective intelligence from our diverse skills which allows us to debate and review managers from various points of view. This enables us to formulate our best and highest quality ideas. The Diversified manages over R8.5 billion (US$600 million) in assets. The investment team is passionate about making it simple and affordable for investors to access a variety of alternative assets. Joao Frasco Chief investment officer BSc, MBA, CFA, CIPM, FASSA, FIA, CAIA Chris Roelofse Head of alternatives portfolio manager B Com, CFA, MBA (Cum laude), CFP Malcolm Holmes Head of institutional portfolio management B Com (Hons), CFA Jennifer Henry Head of retail portfolio management B Com (Hons), CFA, FRM Kent Grobbelaar Head of global portfolio management B Com (Hons), ICMQ, FAUT, IMC Lubabalo Khenyane Portfolio manager BBA, CIPM Richo Venter Portfolio manager B Com (Hons) (Cum laude),cfa Vuyo Mkhathazo Portfolio manager CA (SA) Renate Potgieter Portfolio manager Bsc (Hons), CFA Christine Rangasamy Manager research analyst B Com (Acc) Puleng Kgosimore Manager research analyst BBA Sonal Bhagwan Manager research analyst BBusSci (Act Sci) Quants, CFA Supported by STANLIB s middle office and oversight committees Operational Support Group Legal Alternative Assets Investment Committee Group Compliance For more information To learn more about STANLIB Multi-Manager Diversified proposition and funds, and a list of countries available for distribution, please email SMMBusinessDevelopment@ stanlib.com. Fact sheets are available on. PAGE 11
17 Melrose Boulevard Melrose Arch 2196 PO Box 203 Melrose Arch 2076 T 0860 123 003 (SA only) T +27 (0)11 448 6000 E contact@stanlib.com W stanlibmultimanager.com GPS coordinates S 26.13433, E 028.06800 W Disclaimer As neither STANLIB Multi-Manager (Pty) Limited nor its representatives did a full needs analysis in respect of a particular investor, the investor understands that there may be limitations on the appropriateness of any information in this document with regard to the investor s unique objectives, financial situation and particular needs. The information and content of this document are intended to be for information purposes only and STANLIB does not guarantee the suitability or potential value of any information contained herein. STANLIB Multi-Manager (Pty) Limited does not expressly or by implication propose that the products or services offered in this document are appropriate to the particular investment objectives or needs of any existing or prospective client. Potential investors are advised to seek independent advice from an authorized financial adviser in this regard. Additional Information Additional information such as brochures, application forms, annual or quarterly reports, can be obtained from www.stanlib.com or. STANLIB Multi-Manager (Pty) Limited Reg. No. 1999/012566/07. An authorised Financial Services Provider in terms of the FAIS Act, 2002 (Licence No. 26/10/763). PAGE 12