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  • 27.11.2014 Pavillon Cambon, Paris

    For Professional Investors only

    Emerging Markets Flexible Management Alexandre Narboni

  • MAGELLAN Performance* (net, in EUR)

    Cumulative performance since inception (%)

    Rolling performance (%)

    *Net performance in EUR as of 31/10/2014

    Source: FactSet/Comgest. *Past performance is no guarantee of future results. Indices are used for comparison of past performance only. Performance calculation based on NAV to NAV variation expressed in euros. Fund volatility is calculated using

    weekly performance data. The index used for comparative purposes changed from MSCI Emerging Markets price to MSCI Emerging Markets dividends reinvested from 01/01/2006. Comgest S.A. assumed full management of the fund on 31/12/1994 and

    'performance since inception' is as of this date. 2014 Morningstar, Inc. All rights reserved. Ratings and awards mentioned in this document can change at any time and do not constitute a buy recommendation.

    QTD YTD 1 Year 3 Years

    annualised

    5 Years

    annualised

    10 Years

    annualised

    Inception

    annualised

    Portfolio 5.59 17.77 17.21 10.06 9.15 11.64 9.06

    Index 2.01 13.98 9.21 6.99 8.11 10.38 4.72

    2

    Dec

    1994

    Dec

    1999

    Dec

    2004

    Dec

    2009

    100

    200

    300

    400

    500

    % change

    Fund MSCI EM - NR

  • MAGELLAN VS. MSCI EM: HISTORICAL DRAWDOWNS

    Magellan & MSCI Emerging Markets: worst drawdowns (1994 2013)

    -33%

    -60% -58%

    -66%

    -38%

    -24%

    -61%

    -42%

    -49%

    -25%

    -70%

    -60%

    -50%

    -40%

    -30%

    -20%

    -10%

    0%

    1995 1998 2001 2008 2011

    MSCI EM

    Magellan

    09/03/1995 10/09/1998 21/09/2001 27/10/2008 04/10/2011

    Comgests quality growth expertise in the emerging markets

    with reduced volatility and drawdowns Source: Comgest / Bloomberg, Data is EUR

    Simulated performances are not a reliable indicator of present or future performance. Indices are used for illustrative purposes only.

    Trough of

    the MSCI EM

    3

  • OUR APPROACH TO FLEXIBLE MANAGEMENT

    What do other flexible funds typically do? Why we are different

    Use of alternative asset classes: bonds,

    precious metals, short-selling

    Use of options to hedge downside risk

    Discretionary and therefore

    opaque risk-on / risk-off strategy

    Our expertise:

    invest in quality growth companies

    Options are expensive when we need them!

    Our research on companies must be

    the least affected by short-term noise

    4

  • COMGESTS GEM FLEX CONCEPT

    A flexible

    emerging markets

    equity fund

    Systemic equity market risk

    hedging, using solely

    equity index futures

    Net exposure to equity

    after hedging: 20% to

    100%

    Strict focus on

    quality growth

    companies

    Systematic hedging level

    strategy, indexed on

    emerging markets volatility

    5

  • EM Equity market

    FX

    Alpha

    RISK DIVERSIFICATION DOES NOT ALWAYS MEAN RISK REDUCTION

    HEDGING Balanced Funds

    Diversification to other risks

    Comgest GEM Flex

    Dynamic equity exposure

    Active management

    of EM equity risk

    3 sources of risk EM

    Equity market

    FX

    Alpha

    Equities Cash / Cash equivalents

    Precious metals /

    Commodities

    Bonds

    6

  • EMERGING MARKETS: BONDS DO NOT ALWAYS HEDGE EQUITIES

    2013 Emerging Markets Equities vs. EM Sovereign Bonds

    Source: Bloomberg, 02/10/2013

    Past performance is no guarantee of future results. Indices are used for comparison of past performance only.

    80

    85

    90

    95

    100

    105

    Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13

    Bloomberg Emerging Sovereign Bond Index (USD) MSCI Emerging Markets (USD)

    7

  • Hedging approach

  • THE BIG PICTURE

    Step 1 Statistical calculation of the proxy based

    on portfolio of stocks

    Step 2 Systematic calculation of hedging level based

    on market volatility

    Two steps run

    on a daily basis

    EQUITY

    PORTFOLIO

    ACTUAL HEDGE

    NET PORTFOLIO

    50%

    0

    PROXY

    =

    HEDGING

    PORTFOLIO

    EMERGING MARKETS

    QUALITY GROWTH

    PORTFOLIO

    BASKET OF INDICES MOST

    CORRELATED TO THE

    EQUITY PORTFOLIO

    NET EQUITY

    EXPOSURE:

    20% TO 100% OF NAV CASH

    PORTION OF PROXY

    ACTUALLY SOLD

    WITH FUTURES

    100%

    9

  • Euro Stoxx 1%

    Kospi (Korea) 2%

    Top 40 (South Africa) 3%

    FTSE (UK) 3%

    MexDer (Mexico)

    9%

    Nifty (India) 10%

    S&P 500 11%

    MSCI Taiwan 12%

    Hang Seng 19%

    MSCI Emerging Markets

    30%

    PROXY COMPOSITION: Comgest Growth Emerging Markets Flex

    Daily rebalancing based on the portfolio holdings correlations with indices

    Majority of emerging market indices Date: 31/10/2014

    Source: Comgest

    10

  • CALCULATING THE HEDGING LEVEL

    Equity Exposure* in % of NAV

    *Net of hedge and cash equity exposure.

    Source: Comgest

    0%

    20%

    40%

    60%

    80%

    100%

    0 5 10 15 20 25 30 35 40

    VEM proprietary indicator

    11

  • HEDGING LEVEL INDEXED TO VOLATILITY

    Traditional Emerging

    Market volatility index

    Standard deviation of past

    MSCI Emerging Markets returns Average absolute returns

    Traditional volatility is typically too slow to respond to change

    Proprietary EM dynamic

    volatility indicator (VEM)

    Weighted average of

    absolute variations

    More weight on

    recent observations

    More weight on

    negative returns

    The solution:

    12

  • ESTIMATING EMERGING MARKETS VOLATILITY Proprietary Estimate: as reactive as VIX but less noisy

    800

    850

    900

    950

    1000

    1050

    1100

    5

    10

    15

    20

    25

    30

    35

    40

    45

    Historical EM Volatility Proprietary EM Volatility MSCI Emerging Markets

    The proprietary EM volatility indicator

    is expected to be more reactive to market stress Data between 01/01/2013 and 30/09/2013

    Source: Comgest

    13

  • 0%

    10%

    20%

    30%

    40%

    50%

    60%

    70%

    Ju

    l-1

    2

    Au

    g-1

    2

    Se

    p-1

    2

    Oct-

    12

    No

    v-1

    2

    De

    c-1

    2

    Ja

    n-1

    3

    Feb

    -13

    Ma

    r-1

    3

    Ap

    r-1

    3

    Ma

    y-1

    3

    Ju

    n-1

    3

    Ju

    l-1

    3

    Au

    g-1

    3

    Se

    p-1

    3

    Oct-

    13

    No

    v-1

    3

    De

    c-1

    3

    Ja

    n-1

    4

    Feb

    -14

    Ma

    r-1

    4

    Ap

    r-1

    4

    Ma

    y-1

    4

    Ju

    n-1

    4

    Ju

    l-1

    4

    Au

    g-1

    4

    Se

    p-1

    4

    Oct-

    14

    Average

    25%

    HEDGING LEVEL SINCE LAUNCH Comgest Growth Emerging Markets Flex

    Source: Quantam

    14

  • COMGEST GROWTH EMERGING MARKETS FLEX Performance since inception in EUR*

    CGEM FLEX

    EUR I Acc

    MSCI EM net 60%

    +CASH (EUR) 40%

    Annualised Performance 8.5 3.4

    Annualised Volatility 11.7 8.4

    Since inception

    (11/07/2012, in %) MSCI EM - NR

    5.3

    13.9

    Magellan C

    9.9

    13.4

    Outperformance

    86% of Magellans performance captured in bull market

    Annualised volatility reduced by 12.7% compared to Magellan

    *Net performance data as at 31/10/2014. Past performance is no guarantee of future results. Indices are used for comparison of past performance only. Volatility is calculated using weekly performance data. Source : Factset / Comgest.

    Magellan outperformance

    (stock picking)

    Moderate average

    hedging level

    EM currencies vs. EUR

    15

  • SOLID PROTECTION DURING THE LAST MARKET CORRECTION

    16

    10

    20

    30

    40

    50

    60

    70

    80

    90

    95

    97

    99

    101

    103

    105

    107

    109

    111

    1-Aug 9-Aug 17-Aug 25-Aug 2-Sep 10-Sep 18-Sep 26-Sep 4-Oct 12-Oct 20-Oct

    CGEM Flex I (left scale) MSCI Emerging Markets (left scale) Hedging Level (Right scale)

    Net performance data as at 22/10/2014. Past performance is no guarantee of future results. Indices are used for comparison of past performance only. Source : Factset / Comgest.

    -5.3%

    -10.3%

  • COMGEST GROWTH EM FLEX CHARACTERISTICS

    UCITS IV compliant fund launched on 11/07/2012

    AUM as at 31/10/2014: EUR 94.5m

    Benchmark: 60% MSCI Emerging Markets NR (Eur) + 40% Cash (EUR)

    2 available share classes:

    EUR I Acc Class

    EUR R Acc Class

    17

  • CONCLUSION

    Investing in quality growth companies within the emerging market universe...

    An experienced and diverse investment team

    20-year track record, 9.1% compound annual performance*

    A portfolio with equity holdings in-line with our flagship Global Emerging Markets funds

    ... while reducing volatility

    Systematic, transparent and simple hedging method using only equity index futures

    Equity market exposure hedged between 0 and 80%

    Hedging basket of futures revised daily based on portfolio holdings and market stress

    *Data as of end October 2014. Comgest S.A. assumed full management of Magellan C on 31/12/1994. Magellan C was use during the backtesting phase.

    18

  • Appendices

  • COMGEST GROWTH EMERGING MARKETS FLEX EUR R ACC Performance since inception* (net, in EUR)

    CGEM FLEX

    EUR R Acc

    MSCI EM net 60%

    +CASH (EUR) 40%

    Annualised Performance 6.4 3.1

    Annualised Volatility 10.3 8.8

    Since inception

    (25/09/2012, in %) MSCI EM - NR

    4.8

    14.6

    Magellan C

    9.2

    12.0

    *Performance data as at 31/10/2014. Past performance is no guarantee of future results. Indices are used for comparison of past performance only. Volatility is calculated using weekly performance data. Source : Factset / Comgest.

    Comgest Growth Emerging Markets Flex EUR R Acc

    MSCI EM (net) 60% + Cash (Eur) 40%

    MSCI Emerging Markets Net Return

    20

    Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-1480

    90

    100

    110

    120

    COMGEST GROWTH EMERGING MARKETS FLEX EUR R ACCMSCI EM (NET) 60% + CASH (EUR) 40 %MSCI EMF (Emerging Markets ) - Net Return

  • OUR HEDGING INSTRUMENTS: LISTED INDEX FUTURES

    Fixed universe of index futures

    Index Zone Stock Exchange

    Location Currency

    S&P 500 USA Chicago USD

    DJ EURO STOXX 50 Europe Berlin EUR

    HANG SENG Hong Kong/China Hong Kong HKD

    KOSPI Korea Seoul KRW

    IPC Mexico Mexico City MXN

    TAIWAN MSCI Taiwan Singapour SGD

    NIFTY India Singapour SGD

    TOP 40 South Africa Johannesburg ZAR

    FTSE 100 UK London GBP

    MSCI EMERGING MARKETS Emerging markets New York USD

    No OTC Futures

    Settlement in cash

    Liquid instruments

    Prices available on Bloomberg

    Large geographical coverage

    21

  • COMGEST: KEY CONTACTS EQUITY PMs Vincent Strauss has over 35 years investment experience, 20 of which were gained with Comgest. He graduated from the HEC business

    school (Lausanne) and holds a PhD in Economics. He started his career at Crdit Commercial de France and was responsible for the firm's

    institutional operations. In 1982, he joined Banque Indosuez (Paris) as a portfolio manager supervising the Pacific Basin markets. He was a

    Director at Batif before moving on to Multifinance International. Vincent joined Comgest in 1994 and is today Chairman of Comgest Global

    Investors (the Comgest Groups holding entity) and CEO and CIO of the Comgest Group. Vincent is one of the lead portfolio managers of

    Comgests Global Emerging Markets strategies and a Portfolio Manager within the firms Global Equity strategy.

    Wojciech Stanislawski graduated from the Panthon-Assas University (Paris) with a joint Masters Degree in Business and Financial

    Management. Following several internships with financial institutions in Poland, he joined Comgests investment team in 1999. Wojciech

    has worked in Comgests Global Emerging Markets team for the past 15 years, being named a Portfolio Manager of the flagship GEM

    Magellan fund in 2000. Wojciech is responsible for the daily supervision and management of the fund managers and analysts within the

    GEM equity investment team and he is one of the lead Portfolio Managers of Comgests GEM, GEM Promising Companies, Latin American

    and Indian equity strategies.

    Emil Wolter graduated from the University of London with a BSc in Financial Economics. He has worked as a financial analyst since 1995

    and as an analyst and portfolio manager on Asian and Emerging Markets equities since 1997. Initially an analyst and portfolio manager with

    Pictet Asset Management in London, Emil went on to head up the emerging markets franchise at Polar Capital Partners in both London and

    Singapore. More recently he was Head of Asian Equity Strategy in Singapore at the securities brokerage units of Royal Bank of Scotland

    and Macquarie. Emil joined Comgest in 2012 as Portfolio Manager covering Asian and Global Emerging Market equities.

    22

  • COMGEST: KEY CONTACTS HEDGING STRATEGY

    Alexandre Narboni graduated from ENSAE (School of Economics, Statistics and Finance in Paris) and holds a Masters Degree in Financial

    Mathematics from the University of Columbia. He began his career in loan securitisation with Socit Gnrale in New York before moving on to

    HSBC where he was responsible for the credit risk of hedge funds. He joined Comgest in 2009 and is a Portfolio Manager specialised in US

    equity.

    Charles Biderman completed a Masters in Engineering at the Institut National des Tlcommunications in France, majoring in Finance and

    undertaking part of his studies in Buenos Aires. He joined Comgests investment team in 2006 and is a Portfolio Manager in the Emerging

    Markets team, specialising in Latin American companies. Charles is a Portfolio Manager of Global Emerging Markets equity portfolios and is the

    co-lead Portfolio Manager of the firms Latin American equity strategy, having been a key decision maker since the products inception in 2009.

    23

  • OPERATIONAL CHART

    A transparent division of responsibilities

    24

  • IMPLEMENTING THE HEDGING METHODOLOGY ON A DAILY BASIS

    Comgests resources remain focused on fundamental equity research

    Quantam brings its sophisticated calculation & trading capabilities:

    Best execution of futures through state-of-the-art trading platform (slippage

    minimisation, roll management)

    Data cleaning, data mining and statistical analysis

    Proprietary and adjustable systematic calculation programs

    Active in research regarding hedging techniques

    Quantam is responsible for calculating the proxy and placing the relevant

    futures orders on the different exchanges on behalf of Comgest

    Comgests Middle Office performs post-trade compliance checks and NAV

    reconciliation with the fund Administrator

    Equity exposure may be raised at Comgests discretion should a strong discrepancy

    occur between our views on the market volatility and the hedging strategys output

    25

  • OUR PARTNER: QUANTAM

    Who is Quantam?

    Independent Asset Management firm

    Proprietary futures trading activities since 2004

    6 investment professionals based in Paris and Miami with solid quantitative background

    Quantam has developed proprietary software and methods which are able to screen and analyse, on a daily basis, huge tick-by-tick historical databases on all major electronic exchanges

    Quantam develops and implements advanced algorithmic techniques in order to continually fine tune and increase the robust nature of its tools

    Risk Control

    Quantam only operates on regulated and liquid markets

    Quantam does not practice OTC activities

    Exchange member & co-located at

    Registered with

    Affiliated with

    26

    http://www.quantam.net/http://www.eurexchange.com/http://www.cmegroup.com/http://www.afg.asso.fr/index.php?lang=frhttp://www.nfa.futures.org/basicnet/SearchResults.aspx?type=firm&firm=QUANTAMhttp://www.cssf.lu/fr/about-the-cssfhttp://www.afg.asso.fr/index.php?lang=enhttp://www.aima.org/http://www.flaia.org/

  • IMPORTANT INFORMATION This document has been prepared for professional investors only and may only be used by these investors. This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The contents of this document should not be treated as advice in relation to any potential investment. The securities discussed herein may not be held in the...

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