The Next Fund Manager

Competition 2010
Grand Finals Portfolio Presentation

Sponsored by:
 Disclaimer
Information in this presentation is solely of our
own opinions and should not be considered as
an offer, or solicitation, to deal in any of the
funds or products
 Frontier Investment Fund

Fore FRONT
• Market Trends and Developments
• Latest Information
Motto
• Investing
• Exponential
• Returns
Situational Analysis
 Landfall in New York State
 Major infrastructural damage to NY
 Property values decimated
 Businesses interrupted, ports standstill
Situational Analysis
Macroeconomic Level
 Panic selling of shares
 Major market indices down
 Flight to safety: Gold, Bonds
 Increase in commodity prices
 Materials for reconstruction
 Rising food demand
Situational Analysis
Macroeconomic Level
 Housing prices decrease
 Negative effect on Mortgage backed securities and
insurance firms
 Rising unemployment
 Net wealth decrease, consumer spending decrease
 Manufacturing and Retail suffer short term decline
 Situational Analysis
Microeconomic Level
 Change in consumption patterns
 Primary demands
 Renewable energy and healthcare second priority
 Destruction of transportation assets
 Transportation sector suffer near term losses
 Destruction of properties
 Real estate companies hit hard
 Construction firms benefit from increased demand for
rebuilding
Market Outlook
 Panic selling
 Major market indices down
 Scramble for primary demands
 Rising unemployment
Objectives
 Protection
 Capitalise on Opportunities
 Reassure investors
Strategy

L.E.A.D
 Limit
 Exploit
 Assure
 Draw
Fund’s New Direction and
Strategy
 Protection
 Reduce equities exposure
 Increase holdings in bonds
 Introduce Options
Fund’s New Direction and
Strategy
 Capitalise on Opportunities
 Construction and Commodities
 Maintain 10% liquidity
Fund’s New Direction and
Strategy
 Reassure investors
Original Portfolio
 Diversified
 Across different sectors and asset class
 Moderate
 Balanced allocation of funds, bonds, equities and
cash
 Growth and Potential
 Target growth sectors and companies with potential
Original Portfolio
Asset Class Cash
5%

Bonds
Funds 20%
45%

Equities, 25%
Original Portfolio
Sector Allocation
Healthcare Commodities Renewable Energy
Transportation Emerging Markets Others
4%

20%
20%

8%
25%

23%
New Portfolio
 Diversified
 Across different sectors and asset class
 Moderately Conservative
 Overweight on bonds and underweight on equities
 Increased cash
 Safety of Principle
 Uncertain conditions
New Portfolio
Cash/Money Asset Class
Markets
15%

Funds
30%

Bonds
25%
Equities
Options 15%
15%
New Portfolio
Sector Allocation Construction
7%

Others
29%
Commodities
29%

Healthcare
Emerging
14%
Markets
21%
 Damages in public property,
transportation networks and residential
houses
 Huge emphasis and spending on
rebuilding and re-urbanization predicted
 Strategy
 Firms with large government contracts
chosen
 Firms who specializes in municipal and state
projects rather than private projects favored.
 Counter chosen: US Sterling Construction
Co Inc

 Long
position adopted on the NYSE
SGD 500,000

 NASDAQ 100 put option

 Commodities likely to move upwards in
price
 Flight to safety
 Materials will be required for
reconstruction
 In the long run, commodities will be
required to sustain growth
Fund Schroder Alternative Solutions
Gold and Metal Fund
Sector Commodity; Metal
Asset Allocation SWAPs/ETFs, Equities,
Futures
Size of Fund SGD 209.6 million
Sharpe ratio -0.10
Annual Volatility 28.86
1 yr return 48.58
NAV 10.41
 Mining company listed in Australia
and London
 Mines metals, gold, diamonds,
industrial minerals
 Longposition in Rio Tinto on the
LSE of SGD 500,000
 FTSE 100 put option of SGD
500,000
 Hub for future global economic activity
 Diversification from main global markets
 Strategy
  Investment grade bonds with low risk of default
  Politically and economically stable countries and companies
  Long run view, capitalise on projection of strong growth
Fund United Glb Emerging Mkts
Portfolios S$
Region Emerging markets
Asset Allocation Fixed Income
Size of Fund SGD 40.20 million
3 yr Sharpe ratio 0.43
3 yr Risk reward ratio 0.76
5 yr return 6.84%
 Proposea long position of SGD
1,500,000
 Ageing population
 Rising standard of living in emerging
markets
 Develops, manufactures and markets in-
vitro diagnostic (IVD) devices to detect
and monitor various diseases
 Managed by an experienced team of
professionals and scientists
 Long position of SGD 500,000
 NASDAQ 100 put option of SGD 500,000
 Reduce volatility of portfolio
 Reduce impact of unforeseen
circumstances
 Provide a steady stream of
income
 Highquality bonds with
reasonable yields
Bond YTM/% Current Maturity date Fitch
yield/% Rating
Pfizer Inc. (6.20%) 5.024% 5.688% 15/03/2019 AAA
Johnson and 4.092% 5.042% 15/08/2017 AAA
Johnson (5.55%)
New Zealand 3.779% 6.746% 01/04/2016 AAA
Government Bond
(8.75%)
Microsoft Corp 3.802% 4.066% 01/06/2019 AAA
(4.20%)
Berkshire Hathaway 3.046% 4.644% 15/08/2013 AAA
Finance Corp
(5.00%)
Bond Position / SGD

Pfizer Inc. (6.20%) 500,000

Johnson and Johnson (5.55%) 500,000

New Zealand Government Bond (8.75%) 500,000

Microsoft Corp (4.20%) 500,000

Berkshire Hathaway Finance Corp (5.00%) 500,000

 Consolidate our position
 Capitalize on opportunities when it arises
 Safety of principal
 Aim of the fund is safety of principal while
maintaining a high degree of liquidity
 Propose a position of SGD 1,500,000
L.E.A.D STRATEGY

Limit

Draw

Exploit Assure
L.E.A.D STRATEGY
Strategic Analysis

Methodology Overview

Implementation details
What?
Which?
How? When?
LIMIT .E.A.D
 Strategic Analysis
 Panic selling expected in the short run
 Global financial systems on the downside
 Sentimental forces directing the markets
rather than value mechanisms
 Strategically identified sectors expected to
outperform market indexes
LLIMIT
IMIT .E.A.D
 Methodology Overview
 Implementing equal holdings in short and
long positions
 Shorting the market indexes
 Adopting a long approach on financial
instruments in mentioned sectors.
 Certain amount in liquid money market
instruments and debt instruments
LLIMIT
IMIT .E.A.D
 Implementation Details
 70% in long positions and 15% in short
positions
 15% in money market instruments 25% in
bonds
 Short positions value increase targeted to
exceed decrease in long positions
 Bottoming out dependent on certain market
indicators
 Trading volume, interest rates, bond
prices
 EXPLOITEXPLOIT
L. .A.D

•  Strategic Analysis
•  Value mechanisms to take over from voting
mechanisms as market bottoms out
•  Sectors previously on the upward trend and
sectors benefiting from the crisis to
outperform market on the upside.
 EXPLOIT
L. .A.D
 Methodology Overview
 Implementing equal holdings in short and
long positions
 Shorting the market indexes
 Adopting a long approach on financial
instruments in mentioned sectors.
 Certain amount in liquid money market
instruments and debt instruments
 EXPLOIT
L. .A.D
 Implementation Details
 70% in long positions and 15% in short
positions
 15% in money market instruments 25% in
bonds
 Long positions value increase targeted to
exceed decrease in short positions
 Fears of fairly valued equities factored in
 ASSURE
L.E. .D

•  Strategic Analysis
•  Un-allayed fears of crisis to lead to flight
to safety
•  Safe havens such as debt instruments
and cash deposits preferred
•  Fears of fairly valued equities at buy-in
price
 ASSURE
L.E. .D

•  Methodology Overview
 To maintain a comparatively optimal risk
return level as compared to competitors
 To stem the short term outflow of investors
by promising healthy returns in the short run
and higher returns in the long run
 Subsequent adjustments of greater
emphasis on long positions.
 ASSURE
L.E. .D

 Implementation Details
 Bonds of AAA selected for bond funds
 15% of fund set aside to increase liquidity in
money market funds
 Healthy balance of equities and bonds to
manage optimal risk return ratio based on
historic levels
 ASSURE
L.E.A DRAW
L.E.
.D .

LIMIT EXPLOIT

ASSURE
 Risks

Interest Exchange Liquidity

rate risks rate risks risks
 Interest rate risk
 A prolonged increase in the interest rates due
to the crisis may lead to adverse effects on
global economy
 Uncoordinated monetary responses from
different nations leading to uneven capital
flows
 Exchange Rate risk
 Possible excessive capital outflows from the
US economy
 Further devaluation of the Renminbi in light of
the global impact
 Liquidity risk
 Worse than expected effects of the windstorm
leading to prolonged closure of NYSE
 Credit squeeze and positions on market
frozen
 Mitigation measures
 Healthy diversification in various currencies
 Equal holdings in long and short positions in
neutral fund
 Fund geared towards sectors rather than
demographic regions
 Q&A

Thank You