Vp Bank Ag Class A · SIX:VPBN
Vp Bank Ag Class A — Investor Presentation (May 2004)
26 slides from Vp Bank Ag Class A's investor presentation, May 2004
Slide 1: Hedge Fund Industry
IFOS, Internationale Fonds Service Aktiengesellschaft May 2004 Hedge Fund Industry List of contents Hedge Funds • Trends in financial industry • Characteristics of Hedge Funds • Hedge funds compared to traditional investments • History of Hedge Funds • Principal Hedge Fund strategies • Advantages/op
Slide 2: Current financial market circumstances / What is a Hedge Fund?
Current financial market circumstances Hedge Funds • Low interest level = pressure to perform • Political uncertainty / fear of terrorism = volatile share markets • Once bitten twice shy = low willingness to take risks • Demand for greater flexibility in volatile markets The investors strive after „
Slide 3: Hedge funds vs traditional funds / History of Hedge Funds
Difference between hedge funds and traditional funds Hedge Funds Traditional Management Hedge Funds • Fixed management Fee • Management Fee and Performance Fee • Relative Return measured • Aim is absolute return irrespective against a comparison index of market circumstances • Risk reduction primari
Slide 4: Volume growth / Growth in numbers of Hedge Funds
Volume growth Hedge Funds $817,492 $750,000 $650,000 $622,304 $550,000 $536,060 Assets in USD Billion $487,580 $456,430 $450,000 $367,560 $374,770 $350,000 $256,720 $250,000 $185,750 $167,790 $167,360 $150,000 $95,720 $91,431 $99,436 $75,084 $58,370 $57,407 $54,847 $46,544 $50,000 $38,910 $27,861 $3
Slide 5: Reasons for successful growth / Principal Hedge Fund Strategies
Reasons for successful growth Hedge Funds • Attractive return / risk profile compared to traditional investments. • Hedge funds usually have a low correlation (dependence) to traditional markets. • More and more pension funds are investing in Hedge Funds. • Leading private banks have incorporated He
Slide 6: Relative-value strategies
Relative Value-Strategien (1) Hedge Fund Strategies Relative-value strategies A characteristic of this approach is the elimination of market risk by making use of the price differences between the same or similar investments (=Arbitrage). Arbitrage funds have increased as a result of the growth in a
Slide 7: Event-driven strategies / Directional strategies
Event-driven strategies Hedge fund strategies Event Driven Event-driven strategies hold positions in securities in order to benefit from commercial events such as bankruptcies, mergers and acquisitions, restructures etc. Excellent fundamental credit and analysis abilities, and detailed know-how on v
Slide 8: Directional strategies (2) / Advantages / Opportunities
Directional Strategien (2) Hedge fund strategies Long/Short Equity Largest sector in hedge fund strategies, also called "equity hedged". In order to neutralise market fluctuations, undervalued shares are bought (long position) and overvalued, carefully selected securities are sold (short position).
Slide 9: Flexibility / Performance fee by managers
Flexibilität Use Advantages Greater freedom of movement for hedge fund managers as a result of liberal investment restrictions • Short positions • Leverage (outside capital) • Variety of market instruments 17 Performance Fee by managers Use Advantages Hedge funds normally include charges that are de
Slide 10: Attractive return/risk profile / Low correlation to traditional markets
Attractive return/risk profile* Use Advantages Period: January 1990 – February 2004 20% MSCI World Total Ret. USD 18% JP Morgan Gov't Bond USD 1 HFR Fund of Funds Index 16% 2 HFR Composite Index Convertible Arbitrage Return p.a. 14% Fixed Income Arbitrage Equity Market Neutral 12% Merger Arbitrage D
Slide 11: Low correlation to traditional markets (2) / Absolute return orientation
Low correlation to traditional markets(2) Use Advantages Performance of Hedge Fund strategies in negative MSCI World quarters Source: Hedge Fund Research - www.hfr.com The Barclay Group - www.barclaygrp.com Bloomberg 21 Absolute Return orientation (1) Use Advantages • Hedge Fund managers aim for abs
Slide 12: Absolute return orientation (2) and (3)
Absolute Return orientation (2) Use Advantages Hedge Funds unaffected by the bear market 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% -10% -20% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 -30% -40% MSCI World USD JPM GB USD S&P 500 NASDAQ HFR Composite Index HFR Fund of Funds Sou
Slide 13: Diversification effect / Disadvantages / Risks
Diversification effect Use Advantages Develop a portfolio with the addition of Hedge Funds Period: traditional 10 % Hedge Fund 20 % Hedge Fund January 1990 - February 2004 Portfolio 1 addition 2 addition 2 Return p.a. 7.67% 7.96% 8.25% Standard Deviation p.a. 6.54% 6.14% 5.78% Sharpe Ratio (3 % risk
Slide 14: Poor hedge fund liquidity / High minimum investment
Poor Hedge Fund liquidity Neutralise disadvantages Subscriptions Redemptions 4.87% 3.95% 0.24% 7.07% 3.23% 13.42% 8.00% Weekly Monthly Quarterly Annually Other 40.30% 41.40% 77.51% VP Bank Group solution: Managers' liquidity criteria taken into account Source: Hedge Fund Research - www.hfr.com 27 Hi
Slide 15: Difficult access to hedge funds / Many new managers
Difficult access to Hedge Funds Neutralise disadvantages At present, the demand for Hedge Funds is greater than the supply of Hedge Fund managers. The really good managers are sought after, and these funds usually stop accepting any new money within a very short time. Existing investors are usually
Slide 16: Limited transparency / Use of leverage
Limited Transparency Neutralise disadvantages Only a few Hedge Fund managers offer good transparency for their investments, i.e. by listing all positions. Frequently, only large-scale investors receive this information, and usually with some delay. The reason for this is that the manager is unwillin
Slide 17: Inadequate regulation (domicile) / Identify strategy cycles
Inadequate regulation (domicile) Neutralise disadvantages Domiciles of Hedge Funds Other New York 7.9% Bahamas Bermuda Netherlands Antilles 2.1% 2.6% 7.9% 1.1% Luxembourg 1.5% BVI Ireland 3.3% 10.7% Illinois 1.5% Guernsey 2.0% California 2.7% Delaware Caymans 32.3% 24.3% VP Bank Group solution: Pref
Slide 18: Identify strategy cycles (2) / Manager risk
Identify strategy cycles (2) Neutralise disadvantages • Not all strategies are able to achieve positive returns in every market situation. • Style allocation (weighting of the relevant strategies) is becoming increasingly important. VP Bank Group solution: Cooperation with an established hedge fund
Slide 19: External risks / Future success factors
External Risks Neutralise disadvantages • Share market risk • Interest rate risk • Liquidity risk • Absence of trends • Credit availability risk • Currency risk • Opposing party risk 37 Future success factors Hedge Funds • Good industry network • Good contacts with managers • Careful managers' due d
Slide 20: VP Bank Alternative – The alternative way to success
VP Bank Alternative – The alternative way to success The Hedge Fund concept of VP Bank Group • Launch of two Funds of Hedge Funds on 30 April 2004 • Cooperation with an experienced Hedge Fund company: Ramius HVB Partners, L.L.C 39 Advantages Fund of Hedge Funds • Diversified portfolio by means of a
Slide 21: Summary / Contact
Summary Hedge Funds • The Hedge Fund strategies have good return/risk profiles • Hedge Funds are ideally suited for adding to traditional portfolios • All that glisters is not gold, i.e. the disadvantages and risks have to be considered • Not all Hedge Fund strategies are able to achieve positive re
Slide 22: VP Bank appendix
VP Bank appendix VP Bank • Founded 1956 in Vaduz, Liechtenstein • Operating in six countries • Clients from over 50 countries • About 600 employees • Client assets under management: CHF 25.8 billion (as at 31.12.2003) • One of the leading banks in the Principality of Liechtenstein, playing a key rol
Slide 23: VP Bank group: Comprehensive client advisory
VP Bank group 45 Comprehensive client advisory Top-quality wealth management Asset management Equity capital, fixed-term deposits, cash management, investment options, hedge fund advice, tailor-made products Securities research International, equities and bonds, style investments, owner-related mark
Slide 24: Comprehensive client advisory / Profile 2003
Comprehensive client advisory Top-quality wealth management Investment advice Short and medium-term, market transactions Investment analysis Capital allocation, portfolio optimisation, investment advice, capital consolidation Investment funds Administration, management, supervision, development of i
Slide 25: Key figures 2003 / Disclaimer
Key figures 2003 2002 2003 Tier 1 Ratio 20.2 % 14.3 % Cost Income Ratio 65.8 % 47.3 % Return On Equity 1.3 % 12.7 % Price Earning Ratio je Inhaberaktie 101.1 12.5 Consolidated profit per bearer stock 1.49 CHF 16.02 CHF Dividend per bearer stock 1.50 CHF 5.00 CHF 49 Disclaimer This VP Bank presentati
Slide 26: Thank you for your attention
Thank you for your attention 26