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Schroders — Schroders NewFinance Capital — Investor Presentation (August 2010)
25 slides from Schroders's investor presentation, August 2010
Slide 1: Schroder GAIA Opus Multi Strategy
Schroders NewFinance Capital Schroder GAIA Opus Multi Strategy August 2010 For Professional Investors or Advisers only
Slide 2: The proposition
The proposition – A multi-strategy fund of UCITS-compliant funds – Dynamic top-down allocations – Manager selection and strategy allocations by Schroders NewFinance Capital – Product sits on the existing Schroders Luxembourg GAIA UCITS platform – Liquidity weekly and month-end – Target Return EONIA
Slide 3: Schroder GAIA: The structure
Schroder GAIA The structure Regulated by the CSSF Luxembourg Schroder Investment Management (Luxembourg) S.A. Schroder GAIA SICAV (UCITS) Third Party Managers Schroder Managed Schroder GAIA Schroder GAIA Schroder GAIA Schroder GAIA Egerton European Sloane Robinson Single Manager C Opus Multi QEP Glo
Slide 4: Advantages over a traditional fund of hedge funds
Advantages over a traditional fund of hedge funds – Regulated structure – Liquid (weekly and month end) terms and liquid underlying investments – Avoids asset-liability matching issues – The manager is able to make tactical strategy allocations and shorter term adjustments not possible when hedge fu
Slide 5: Why NewFinance Capital?
Why NewFinance Capital? This Fund combines our skills in; 1. Manager selection – The fast-growing universe in absolute return UCITS Funds is populated by managers we know from our experience of investing in hedge funds 2. Strategy allocation – Investing in liquid underlying funds increases our capac
Slide 6: Why the Schroder GAIA platform?
Why the Schroder GAIA platform? – Leverages Schroders’ expertise in creating and managing funds in Luxembourg – Sophisticated Risk Management tools to ensure adherence to UCITS regulations – Proven platform already hosting single manager UCITS funds 5
Slide 7: Investment Framework
Investment Framework – The fund invests mainly in “absolute return”’ UCITS Funds, sometimes known as “Newcits” funds – The universe is very fast-growing. As of mid 2010 we are already tracking around 400 UCITS-compliant funds with several added each week – We believe the best managers will come from
Slide 8: Investment Strategy
Investment Strategy – The two strategy pillars will be – Long short equity - in various substyles – Macro/ CTA/ Tactical Asset Allocation (TAA) – According to our top-down views there could be smaller allocations to: – Event driven; – Convertible bonds; – Volatility trading; – Other strategies as ap
Slide 9: What strategies work under UCITS
What strategies work under UCITS Liquidity and leverage are the key limiting factors Eligible assets, VaR and counterparty risk must also be considered More Fixed income leverage arbitrage Strategies that don’t fit UCITS Convertible bond arbitrage Macro and CTA Long/short Event Driven Credit Strateg
Slide 10: Investment process overview
Investment process overview Top Down Strategy Selection Manager Selection Operational Due Diligence Portfolio Construction Portfolio & Risk Monitoring 9
Slide 11: Top Down Strategy
Top Down Strategy – Measure of market risk appetite – Schroders NewFinance Capital Risk Aversion Index – Macro economic outlook – Analysis of opportunities in each sub-strategy – And which ones to avoid 10
Slide 12: 2010 - Outlook and favoured sub strategies
2010 - Outlook and favoured sub strategies – GDP growth remains weak in developed countries – Bank lending remains low and securitisation still slow – Only bond markets are functioning properly – Interest rates to remain low but Quantitative Easing (QE) ending – Sovereign risk has increased signific
Slide 13: Asset Allocation by Strategy
Asset Allocation by Strategy Dynamically managed Typical strategy allocation ranges Target allocation at launch Long short equity 20-60% Long short equity 35% Macro, TAA and CTA 10-50% Macro, TAA and CTA 40% Event Driven 0-20% Event Driven 10% Convertible Bonds 0-20% Convertible Bonds 10% Fixed inco
Slide 14: Bottom Up Manager Selection
Bottom Up Manager Selection Analysts evaluate managers by reference to key requirements for each strategy – Experience – Track record & skill – typically assessed on the managers’ performance outside of UCITS structures – Investment Process – Risk management – Integrity – Fit with UCITS constraints
Slide 15: Operational due diligence
Operational due diligence The Operation Due Diligence Team: Key criteria: – Legal aspects – Is independent of the qualitative and quantitative – Pricing accuracy & independence research processes – Quality of Prime Broker / Administrator / Auditor – Brings together the specialist skills of hedge fun
Slide 16: Investment process
Investment process Portfolio construction Approved Fund List Preliminary sizing Qualitative Capacity/liquidity Quant analysis Using RiskData VAR & Incremental VAR Risk Monitoring Final Portfolio 15
Slide 17: Portfolio
Portfolio Schroder GAIA Opus Multi Strategy launch portfolio Fund Top level category Strategy Equity substyle Allocation Polar Capital UK Absolute Return Fund Long Short Equity Long Short Equity - Europe Short term trader 4.3% Gartmore UK Absolute Return Long Short Equity Long Short Equity - Europe
Slide 18: Investment Process Governance
Schroders NewFinance Capital Investment Process Governance Investment Committee The Investment Committee (Monthly) – Chaired by Marc Hotimsky Marc Hotimsky* – Participants: Benjamin Mouté, David Mooney, Marc Romano, (Chair) Shilpa Kotwal and Martin Blank David Mooney* Benjamin Mouté* – To approve al
Slide 19: Investment team combining expertise and experience
Schroder GAIA Opus Multi Strategy Investment team combining expertise and experience Marc Hotimsky Executive Chairman of Schroders NewFinance Capital and Chairman of Investment Committee GAIA Opus Multi Strategy Product Specialists Marc Hotimsky Middle Office and Justin Lawson Operational Support (1
Slide 20: Ongoing risk management and monitoring
Schroder GAIA Ongoing risk management and monitoring 1. Independent daily 2. Risk Management and 3. Operational due diligence 4. Quarterly risk review by monitoring of UCITS rule investment monitoring the Schroders Investment compliance Risk Framework Board Schroder Investment NewFinance Capital New
Slide 21: Schroder GAIA Opus Multi Strategy Fund Risk Management
Schroder GAIA Opus Multi Strategy Fund Risk Management Traditional FOHF Risk Management Single Fund UCITS Monitoring Compliance (GAIA (SIMLUX) Egerton) Fund of Managed Accounts Risk Management Fund of UCITS Funds Risk management 20
Slide 22: Fund of Fund Risk Management
Fund of Fund Risk Management Risk Report Hedge Funds from Returns Managers B Risk Report Risk Report from Formatting from Managers A Managers C Schroders Schroders NewFinance NewFinance Capital Capital Returns Exposures Database Database Aggregation In-house tools + RiskData© Exposures by asset clas
Slide 23: Key Facts
Schroder GAIA Opus Multi Strategy Key Facts – Investment style - Diversified fund of funds, Flexible multi strategy, Active strategy allocation and manager selection – Launch date - 14th June 2010 – Dealing frequency – Weekly, on each Monday or the next Business Day if a Monday is not a Business Day
Slide 24: Organisational chart
NewFinance Capital Organisational chart Marc Hotimsky (30) Executive Chairman and Chairman of Investment Committee Investment Management Business Management Eric Bertrand (25) David Mooney (25) and Benjamin Mouté (10) GAIA Leader Marc Romano (20) Co-Heads of Investment Chief Executive Officer Commod
Slide 25: Important Information
Important Information Risk Warnings: The fund invests in UCITS pursuing hedge fund-style-strategies, which involve a high degree of risk related to market, currency, counterparty and liquidity risks. This fund may use financial derivative instruments as a part of the investment process. This may inc
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