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
Objectives
Protection
Capitalise on Opportunities
Reassure investors
Strategy

L.E.A.D
Limit
Exploit
Assure
Draw
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 Bonds
5% 20%

Funds
45%

Equities, 25%
Original Portfolio
Sector Allocation
Healthcare Commodities Renewable Energy
Transportation Emerging Markets Others
20% 4% 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
Asset Class
Funds
Cash/Money Markets 30%
15%

Bonds
25%

Options Equities
15% 15%
New Portfolio
Sector Allocation
Others Construction
29% 7%
Commodities
29%

Healthcare
14%

Emerging Markets
21%
Construction

 Damages in public property, transportation

networks and residential houses
 Huge emphasis and spending on rebuilding
and re-urbanization predicted
Construction

 Strategy
 Firms with large government contracts chosen
 Firms who specializes in municipal and state
projects rather than private projects favored.
Construction
 Counter chosen: US Sterling Construction
Co Inc

 Long position adopted on the NYSE

SGD 500,000

 NASDAQ 100 put option

Commodities

 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
Schroder Alternative Solutions Gold
and Metal Fund
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
Schroder Alternative Solutions
Gold and Metal Fund
Schroder Alternative Solutions
Gold and Metal Fund
Company Overview
 Mining company listed in Australia
and London
 Mines metals, gold, diamonds,
industrial minerals
Strategy
 Long position in Rio Tinto on the LSE
of SGD 500,000
 FTSE 100 put option of SGD 500,000
Emerging Markets

 Hub for future global economic activity

 Diversification from main global markets
Emerging 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
United Glb Emerging Mkts Portfolio S$
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%
United Glb Emerging Mkts Portfolio S$

 Propose a long position of SGD 1,500,000

Healthcare

 Ageing population
 Rising standard of living in emerging markets
China Medical Technologies

 Develops, manufactures and markets in-vitro

diagnostic (IVD) devices to detect and
monitor various diseases
 Managed by an experienced team of
professionals and scientists
China Medical Technologies

 Long position of SGD 500,000

 NASDAQ 100 put option of SGD 500,000
Bonds
 Reduce volatility of portfolio
 Reduce impact of unforeseen
circumstances
 Provide a steady stream of income
Strategy
 High quality bonds with
reasonable yields
Bonds
Bond YTM/% Current Maturity Fitch
yield/% date Rating
Pfizer Inc. (6.20%) 5.024% 5.688% 15/03/2019 AAA
Johnson and Johnson 4.092% 5.042% 15/08/2017 AAA
(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%)
Asset Allocation
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

Cash Reserves

 Consolidate our position

 Capitalize on opportunities when it arises
 Safety of principal
Phillip Money Market Fund

 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
L. EXPLOITEXPLOIT .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.
L. EXPLOIT .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
L. EXPLOIT .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
L.E. ASSURE .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
L.E. ASSURE .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.
L.E. ASSURE .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
L.E.A DARAW
L.E.
. SSURE .D

LIMI EXPLOIT
T

ASSURE
RISK PROFILING

Risks

Interest Exchange Liquidity

rate risks rate risks risks
RISK PROFILING

 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
RISK PROFILING

 Exchange Rate risk

 Possible excessive capital outflows from the US
economy
 Further devaluation of the Renminbi in light of the
global impact
RISK PROFILING

 Liquidity risk
 Worse than expected effects of the windstorm
leading to prolonged closure of NYSE
 Credit squeeze and positions on market frozen
RISK PROFILING

 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