SEPTEMBER 2013

NEW MODEL

ADVISER PRESENTATION BY TOM SHERIDAN

CEO, SEVEN INVESTMENT MANAGEMENT

THIS IS NOT FOR DISTRIBUTION TO RETAIL CLIENTS

DO THE RIGHT THING

CLEAR AND COMPLIANT

GREAT SERVICE

COST EFFECTIVE

INNOVATIVE

DISCRETIONARY

MANAGEMENT

7IM

PLATFORM MULTI-ASSET

FUNDS

FOCUS ON MULTI-ASSET WITH PASSIVES

AAP AND MODEL PORTFOLIOS

• Historical – 7IM & Ibbotson

• Forward-Looking - 7IM Asset Allocation Committee

• Due Diligence, Monitoring, Liquidity

• Credit Risk

• Liquidity Risk

• Concentration Risk

• Currency Risk

• Regulatory Risk

• Tracking Error

• Cost

Fund Profile Personal Injury Moderately

Cautious Balanced

Moderately

Adventurous Adventurous

UK Equity 10 11 16 18 19

UK Equity Small Cap 0 3 4 6 8

US Equity 7 6 10 12 12

European Equity 5 4 6 9 9

Japan Equity 0 0 3 4 4

Far East Equity 0 0 3 3 3

Emerging Markets Equity 0 3 6 11 15

Frontier Markets 0 0 0 3 5

Equities 22 27 48 66 75

Commodities (incl. Gold) 7 3 3 4 4

Hedge Funds 3 3 3 3 3

Managed Futures 3 3 3 4 4

Private Equity (listed) 0 0 0 3 6

Real Estate (Global REITs) 0 0 3 4 5

Alternatives 13 9 12 18 22

Global Government Bonds 8 4 3 0 0

Global Inflation Linked Bonds 3 3 0 0 0

Global Corporate Bonds 4 7 4 0 0

Global High Yield Bonds 3 6 4 0 0

Gilts 9 7 6 3 0

Short Term Gilts 4 5 0 0 0

Index Linked Gilts 9 6 5 3 0

UK Corporate Bonds 9 13 9 4 0

Emerging Market Bonds 4 6 5 3 0

Fixed Income 53 57 36 13 0

Cash 12 7 4 3 3

Expected Average Return 4.4 5.1 6.5 7.9 8.9

Standard Deviation 6.6 8.0 11.5 14.9 17.3

Expected Compound Return Expected Maximum Return Expected Minimum Return

-15

-10

-5

0

5

10

15

20

25

30

0 1 2 3 4 5 6 7 8 9 10

Retu

rns

Years Invested

Expected Compound Return Expected Maximum Return Expected Minimum Return Actual Compound Return

As at 30 June 2013

-15

-10

-5

0

5

10

15

20

25

30

0 1 2 3 4 5 6 7 8 9 10

Retu

rns

Years Invested

MICHAEL HUGHES

ex CIO, Baring

ALEX SCOTT 7IM Senior Investment Manager

GERARD LYONS Economic Adviser ~

to Mayor of London

CHARLES DIAMOND Founder Econostat

TONY NORRIS

First International

JOHN GIBBON Ex British Aerospace

pension fund director

ROS PRICE 7IM Chief Strategist and Chair

JOHN HATHERLY

Research Consultant for M&G CHRIS CHARLTON Currency Management

JUSTIN URQUHART STEWART 7IM co-Founder

HENRY BOUCHER

Deputy CIO for Sarasin

The Seven Investment Management Asset Allocation Committee

CHRIS DARBYSHIRE 7IM CIO

PHILIP STRAEHL Ibbotson Associates

SOURCE: 7IM/IBBOTSON

AS AT JUNE 2013

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100% Cash & Money Markets

Currency Funds

CTAs

Hedge Funds & Other Strategies

Infrastructure

Property & Related Equity

Private Equity

Timber

Commodites & Related Equity

Emerging Market Bonds

Global High Yield

Global Corporate Bonds

Sterling Corporate Bonds

Index-linked Gilts

Global Index Linked Bonds

Short Term Gilts

Gilts

Global Government Bonds

Global Themes

Frontier Markets Equity

Emerging Markets Equity

Far East Equity

Japan Equity

European Equity

North American Equity

UK Small Cap Equity

UK Equity

SOURCE: 2008-2010 LIPPER UK FUND OF FUNDS ‘INCLUSIVE’ TOTAL EXPENSE RATIO ANALYSIS

REPORTS.

2011 & 2012 ONGOING CHARGES FROM CAPITA FUND ACCOUNTS DATA.

N.B. LIPPER AND CAPITA ARE BOTH INDUSTRY STANDARDS BUT HAVE DIFFERENT

METHODOLOGIES

0.60%

0.70%

0.80%

0.90%

1.00%

1.10%

1.20%

1.30%

2008 2009 2010 2011 2012

AAP Mod Cautious AAP Balanced

AAP Moderately Adventurous AAP Adventurous

*Includes VAT

7IM Platform

0.00%

Underlying Passives

0.17%

7IM AMC

0.50%

7IM Platform

0.30%

Underlying Passives

0.20%

7IM Discretionary Fee

0.30%*

0.67% 0.80%

SAFE DOES NOT = BORING

WHAT IS SMART PASSIVE?

24

RATIONALE

IMPLENTATION

• Strategy cannot be implemented by other means

• Only if independent 3rd party pricing exists

• Bidding process between credit worthy counterparties

• Zero tracking error guaranteed

• Daily liquidity guaranteed at NAV, calculated independently

• Trading costs must be disclosed

• Select from qualifying counterparties based on lowest costs

Performance of equal weight index vs S&P 500

SOURCE : BLOOMBERG

27

MINIMUM VARIANCE & PORTFOLIO CORRELATION

MAXIMISING THE “DIVERSIFACTION RATIO”

OPTIMISED MIX-LESS CORRELATED RELATIONSHIPS

Aims to build portfolio of uncorrelated stocks

SOURCE: TOBAM

29

Reduces

exposure to

volatile stocks

like financials

TOP BENCHMARK FINANCIALS

CHINA CONSTRUCTION BANK

BANK OF CHINA LTD

STANDARD BANK

ICICI BANK LTD

BANK CENTRAL ASIA

TOP MAX DIVERSIFICATION FINANCIALS

CHINA CONSTRUCTION BANK

BANK OF CHINA LTD

STANDARD BANK

ICICI BANK LTD

BANK CENTRAL ASIA

Returns vs benchmark since inception

SOURCE : BLOOMBERG

30

Performance vs market cap index (Annualised Returns)

SOURCE: RAFI

33

Developed Markets

SOURCE: RAFI

34

Top 5 by Market Cap Fundamental

Index

Market Cap

Index Difference

United States 22.1% 29.5% -7.4%

Japan 7.3% 27.4% -20.2%

France 6.3% 7.4% -1.1%

Italy 6.0% 7.0% -1.0%

Germany 7.2% 6.5% 0.7%

Japan has a significant

underweight

Emerging Markets

SOURCE: RAFI

35

Top 5 by Market Cap Fundamental

Index

Market Cap

Index Difference

Mexico 10.7% 16.3% -5.6%

Poland 7.1% 12.5% -5.4%

South Africa 6.6% 9.3% -2.7%

Thailand 7.5% 8.8% -1.3%

Malaysia 6.0% 8.4% -2.4%

AUMs of popular smart passive product providers

SOURCE: RAFI AND TOBAM

37

QUESTIONS?

NOT FOR DISTRIBUTION TO RETAIL

INVESTORS