Realcap gmap portfolio 14052015

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RealFin Capital Partners Global Multi-Asset Portfolio (GMAP)

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Transcript of Realcap gmap portfolio 14052015

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RealFin Capital PartnersGlobal Multi-Asset Portfolio (GMAP)

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Company Overview

Since its inception in August 2003, the RealFin Group has earned awidely acknowledged reputation as a market leader in alternative assetmanagement, advisory and structured financial solutions to theinstitutional market (pension funds, life companies, asset managersand stock brokers).

The Group currently controls assets in excess of USD1.7bn.

In order to provide South African private clients access to multi assetclasses on a global and unhindered basis, a strategic decision was takento extend our specialist asset management service to include globaldiscretionary asset management to the high-tier private client market.RealCap was therefore founded in 2012 under the umbrella of theRealFin Group.

Although based in Cape Town, South Africa, our product offering isglobal. Through our counterparties in Switzerland, RealCap offersspecialist, global investment management services and products to oursophisticated investors with a focus on sectors and countries where webelieve our unique skill set provides us with positive informationasymmetry. We also offer confidential and personalised Multi-FamilyOffice services to assist our South African investor families in makinginformed and educated decisions that will best suit present as well asfuture family generations.

Transparency and security form the foundation of RealCap andtogether with a driven, passionate and committed team of people whoare obsessed with perfection and innovation, we are able to offer ourinvestors a truly unique investment management service.

Directors

Company Information

Multi-Family Office

Investment Management

Specialised Investments

Product Offering

Steve Doidge Chief Executive Officer

Kerry Booth Director

Cornelis Batten Director

Company Registration # 2011/122951/07

Authorised Financial Services Provider # 43784

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Global “investing in assets anywhere in the world”

The nonsense of “home bias”

Why should a South African high net worth investor’s portfolio be constructed differently to that of an investor in anothercountry? What makes South African investors so reluctant to move beyond approximately 1.4% of the global investmentuniverse and start participating in the remaining 98.6% available to them?

It is a much-researched phenomenon known as “home bias” and at RealCap we feel strongly that the vast majority ofSouth African investors are poorly advised when it comes to the management of investment assets.

Global balance sheet

RealCap adopts a global balance sheet approach to investment management which dictates that besides those assets aninvestor needs to match any local based liabilities - debt, lifestyle expenses etc. - the remaining “growth assets” need to beput to work on a global basis wherever the best risk-adjusted global opportunities present themselves.

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RealCap Global Multi-Asset Portfolio

GLOBAL

Investing in assets anywhere in the world

MULTI-ASSET

Equities, bonds/cash, real estate, commodities &

specialist

PORTFOLIO

A Core/Satellite approach to provide diversification and

“Alpha”

“Managing your global balance sheet locally”

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Multi-asset

Investors need to have portfolios that are diversified beyond the typical equities and bonds and must include global realestate, commodities and specialist opportunities in order to generate alternative sources of return.

Core-satellite

RealCap’s approach provides investors with a core foundation of strategic multi-asset holdings and a specialist satelliteexposure which is designed to deliver “Alpha” - outperformance relative to traditional benchmarks.

Specialist opportunities

Specialist investment opportunities do not necessarily fit within a typical asset class classification but are either designedto provide non-traditional sources of return not typically linked to markets or to provide significant outperformancerelative to traditional asset returns.

Multi-Asset “Equities, bonds/cash, real estate, commodities and specialist”

ETFs – our choice of investment vehicleIn line with our commitment to offering our investors in depth due diligence and transparency our investmentthemes are expressed using Exchange Traded Funds (ETFs). By using ETFs we are able to achieve a diversifiedportfolio which would include hard to own assets and our focus is on which sectors and markets are poised toperform. In this way we are able to effectively manage our investors’ assets by providing them with exposure toselected countries, sectors and subsectors in a very efficient, comprehensive and cost effective manner. We believethat trying to pick “winners” within a chosen investment theme has its own set of limitations at best and we preferthe use of ETFs to back our views.

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Investing assets using Exchange Traded Funds “ETFs”

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What is an ETF?

An ETF (Exchange Traded Fund) is a term given to investment vehicles which typically track or represent a basket of bonds,commodities, currencies and equity shares which have been pre-packaged into one investment. For example, an ETF whichtracks the S&P 500 will contain all the underlying equities which make up the S&P 500 index.

The main purpose of the ETF is not to outperform the index, but rather to simulate the index return. Put simply, the goal ofan ETF is to yield the same return on investment (ROI) as its correlating index.

For example: An equity index is a collection of stocks with a common theme representing an industry e.g. the Standard andPoor’s Technology Index is a compilation of approximately 112 different stocks from various technology companies.Without the advantage of using an ETF (IXN - see next page) to gain exposure to the entire equity index an investor wouldneed to purchase all 112 shares separately. This would prove to be an extremely onerous, costly and time sensitive exercise.

ETFs are an efficient means to implement top-down global macro trade ideas as they allow an investor one entry point to allof these shares.

There are currently just over 5,000 ETF’s listed globally. An ETF trades close to its net asset value over the course of a tradingday.

Exchange Traded Fund

ETFBonds

Commodities

Currencies

Equities

Property

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IXN Example - iShares Global Tech ETFTop 20 Holdings

iShares Global Tech ETF IXN

Inception Date Nov 12, 2001

Fund Holdings as of 06-Apr-15

Total Net Assets $906,126,634

Name Sector Country Market Value Shares Price Exchange

APPLE INC Technology Hardware & Equipment United States $141,930,047 1,114,488 127.35 NASDAQ

MICROSOFT CORP Software & Services United States $65,213,353 1,569,704 41.55 NASDAQ

FACEBOOK CLASS A INC Software & Services United States $32,901,474 399,096 82.44 NASDAQ

SAMSUNG ELECTRONICS LTD Technology Hardware & Equipment Korea (South) $30,913,409 22,816 1,354.90 Korea Exchange (Stock Market)

GOOGLE INC CLASS A Software & Services United States $29,625,693 54,464 543.95 NASDAQ

GOOGLE INC CLASS C Software & Services United States $29,135,604 54,280 536.76 NASDAQ

INTERNATIONAL BUSINESS MACHINES CO Software & Services United States $28,473,669 175,720 162.04 New York Stock Exchange Inc.

INTEL CORPORATION CORP Semiconductors & Semiconductor Equipment United States $28,128,448 906,200 31.04 NASDAQ

CISCO SYSTEMS INC Technology Hardware & Equipment United States $26,574,995 976,304 27.22 NASDAQ

ORACLE CORP Software & Services United States $26,346,165 613,272 42.96 New York Stock Exchange Inc.

VISA INC CLASS A Software & Services United States $24,329,510 373,152 65.2 New York Stock Exchange Inc.

QUALCOMM INC Technology Hardware & Equipment United States $21,382,346 315,560 67.76 NASDAQ

TENCENT HOLDINGS LTD Software & Services China $19,910,084 1,030,400 19.32 Hong Kong Exchanges And Clearing Ltd

TAIWAN SEMICONDUCTOR MANUFACTURING Semiconductors & Semiconductor Equipment Taiwan $16,695,762 3,546,600 4.71 Taiwan Stock Exchange

MASTERCARD INC CLASS A Software & Services United States $16,343,760 187,128 87.34 New York Stock Exchange Inc.

SAP Software & Services Germany $13,384,829 180,872 74 Xetra

EBAY INC Software & Services United States $11,970,838 210,680 56.82 NASDAQ

ACCENTURE PLC Software & Services United States $11,462,131 119,784 95.69 New York Stock Exchange Inc.

TEXAS INSTRUMENTS INCORPORATED Semiconductors & Semiconductor Equipment United States $11,456,532 201,664 56.81 NASDAQ

HEWLETT PACKARD Technology Hardware & Equipment United States $11,063,344 347,576 31.83 New York Stock Exchange Inc.

EMC CORP Technology Hardware & Equipment United States $10,047,589 384,376 26.14 New York Stock Exchange Inc.

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Benefits of using ETF’s

Direct access to a market, asset class, or strategy

High liquidity and flexibility in investment choice

Variety – wide selection of instruments by geography, type and style

Low, transparent fees

ETFs incur their own share of fees but unlike buying and selling of multiple shares which incurs high costs andcommissions with every transaction, when buying an ETF there is one trade, one price, one commission.

Tax advantages

A capital gain is realised as soon as an investor makes a profitable sale of shares. With ETFs, fewer transactions = lesscapital gain taxes which are only realised with the sale of the entire ETF.

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Portfolio Make-up

Core and satellite

We split our portfolios into a core allocation and asatellite allocation with 75% of assets making upthe core and 25% allocated to specialist satelliteopportunities.

Core allocation

Within the core assets, we assign minimum andmaximum allocations per asset class. The assetclass constraints as well as the core-satelliteallocation provide a disciplined framework formaking investment decisions.

Satellite allocation

The specialised satellite opportunities have noasset class, geographical or sector-relatedrestraints placed on them. We will invest in assetswhich provide non-traditional sources of return orin specific opportunities where we have a veryhigh level of conviction.

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Making the Asset Allocation Decision

Asset class allocations

The determination of “how much” to allocate to a particular asset class, geographical region, sector or subsector is made bythe investment team. The team will consider a range of factors to determine a view on each asset class and geographicalregion – regions, countries or sectors of interest are subject to an intensive analysis which ultimately leads to a score or levelof conviction for the asset. This process is undertaken weekly.

Business cycle

Industrial production

Retail sales InventoriesUnemployment

rate

Economic conditions

Interest rates Inflation GDP Current account

Investor sentiment

Consumer confidence

Leading indicators

News flow

Market conditions

Market levels Money flows Dividend yields PE ratios

Discretionary view

Team view

MARKET

Scorecard

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GMAP Salient Features

Portfolio structure

GMAP can be accessed directly through asegregated account held with Credit Suissein Zurich, Switzerland. Alternatively, thoseinvestors wanting to potentially enhance taxefficiency can access GMAP through the“RealFin Linked Endowment Policy” which isissued by a Sanlam Group company.

Who should invest

GMAP is suitable for an investor’s growthassets – investable assets that the investordoes not require for matching liabilities inhis/her country of residence.

Leverage

No leverage is employed.

Redemption notice

For direct investors, there is no lock-upperiod and investors may terminate theirmandate on a quarterly basis (subject to 60days notice). For investors via theEndowment Policy, full liquidity can beprovided after a three year period haselapsed.

Portfolio currency

United States Dollars.

Fees1 (direct & policy investors)

Investment Amount(United States Dollars)

Management Fee(per annum)

Performance Fee2

(only applicable to satellite portion)

0 - 1,000,000 1.00 % 20 %

1,000,001 - 2,000,000 0.50 % 20 %

More than 2,000,000 0.25 % 20 %

1 All fees quoted exclude South African Value Added Tax (14%) and furthermoreexclude third party broker’s commission, and any third party’s charges, governmentlevy, stamp duty, withholding taxes (if any) and further charges of externalsettlement agents or custodian entities.

2 Applicable only to holdings designated as part of the satellite portfolio componentand based on a high watermark and a performance benchmark of US 12 monthLIBOR.

Minimum investment

For a direct investment we require a minimum of USD 500,000 (fivehundred thousand United States Dollars) or currency equivalent. Ifaccessed through the RealFin Linked Endowment Policy a minimumof R250,000 (two hundred and fifty thousand Rand) will apply.

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Chief Investment Officer (CIO)

Steve Doidge

Steve is the co-founder of the RealFin Group which oversees assets of USD1.7 billion. The RealFin Group consists ofRealtime Financial Solutions (Pty) Ltd, which focuses on providing consulting and investment structuring services to theSouth African institutional market, and RealFin Capital Partners (Pty) Ltd (“RealCap”), which focuses on specialised assetmanagement.

Steve is responsible for the strategic management of the RealFin Group and is the Head of RealCap’s investmentmanagement committee. He has 17 years industry experience and prior to founding the RealFin Group in August 2003 wasa director of Barnard Jacobs Mellet. Prior to joining Barnard Jacobs Mellet, Steve was a part of the Investec Group.

Steve holds the following qualifications: BCom, Advanced Taxation Certificate, MCom, MPhil. Furthermore, he is one of avery few number of South Africans who has gained the extremely sought-after and challenging CAIA (CharteredAlternative Investment Analyst) qualification which is considered the international academic benchmark for professionalswithin the alternative asset management arena.

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Frequently Asked Questions“investment related”

What return can I expect?

We have a USD investment return target of 6-10% per annum over a rolling five year period. Our objective is to deliver capitalpreservation and growth in hard currency terms over a long term time frame. We achieve this through our core-satelliteapproach which provides a blend of higher growth potential assets with more traditional investments.

If you don’t invest in unlisted assets how do you gain exposure to real estate and physicalcommodities?

Our real estate exposure is obtained either via mutual funds which invest in listed Real Estate Investment Trusts (REITs) orETFs which track a specific property index. As such we have real estate exposure without the limitations of actually owningphysical property. With regard to physical commodities we utilise ETFs which give us liquid exposure to an underlyingphysical commodity.

I currently invest in a South African brand name offshore unit trust – what differentiates you?

There are some domestic unit trusts that “feed” into offshore assets and our local managers have done very well, particularlyduring 2013. They offer a way to participate in predominantly developed market offshore equities. This is different to having apersonal Swiss investment account (through a direct investment) and gaining access to the ETFs/managers globally acrossmultiple asset classes. Furthermore and through our direct structure, GMAP can cater for investments made from SouthAfrica in Rands, investments from funds already offshore as well as via the foreign exchange allowance granted to naturalperson investors.

Do you invest in unlisted assets?

No. Our investment universe is limited to liquid ETFs, mutual funds and securities which are listed on recognised globalexchanges.

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Why do you show performance in USD?

We provide performance reports in the base currency of the portfolio, namely United States Dollars as we believe this to bea good measure of an investor’s global wealth. The Rand is an emerging market currency and as such is volatile. We do notwant Rand volatility to cloud our investors’ assessment of our investment performance.

Why is the direct minimum investment so high?

Our offering is exclusive. We provide a highly specialised investment portfolio, both in terms of access to global investmentsvia our Swiss counterparty and in terms of service to our investors. Although through the policy, it allows investors theopportunity to access the GMAP product at a R250,000 minimum.

How often will I receive a statement from RealCap?

Investor statements will be prepared on a quarterly basis to coincide with tax reporting periods, namely February, May,August and November. The statement will reflect the underlying portfolio holdings, performance for the quarter,performance since inception as well as all fees.

Do you provide for investment income?

We do not provide for regular income and all interest income and dividends are reinvested. Should you require regularincome, this would take the form of a redemption from the portfolio which can be arranged if required.

Do you provide tax reports?

We provide tax reports after the end of the tax period detailing realised and unrealised gains as well as domestic and foreignincome.

Who is your offshore counterparty?

Our offshore counterparty in Switzerland is Credit Suisse AG in Zurich. They provide a state of the art reporting system andglobal transactional platform.

Frequently Asked Questions“investment related cont.”

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Frequently Asked Questions“fee related”

Do your counterparties charge fees?

Investors making use of a direct account with Credit Suisse AG will pay an annual custodial fee of 0.25% charged on aquarterly basis. For investors unable to invest directly offshore (through the use of a tax clearance or with funds already heldoffshore), we offer an alternative arrangement via FNB Securities who make use of their offshore balance sheet capacity toallow our investors to invest on the Credit Suisse platform. FNB Securities charge a platform fee of 0.25% in addition to theCredit Suisse custodial fee. Entering or exiting an investment holding will attract a brokerage fee.

Do you charge a performance fee?

We charge a performance fee only on the satellite portion of the portfolio. This is subject to a high water mark and is takenon positive gains in excess of our performance benchmark which is US 12 month LIBOR. No performance fee is charged onthe core portion of the portfolio.

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Invest with us today

RealFin Capital Partners Proprietary Limited is an authorised financial services provider - Licence No. 43784

CONTACT US

Tel: +27 21 761 1075 • Email: [email protected]

Physical Address:Office 303, Third Floor, Pam Golding on Main, Corner of Main & Summerly Rd, Kenilworth, 7700, Cape Town

Postal Address:Suite 762, Private Bag X16, Constantia, 7848

www.realcap.co.za

Steve Doidge

Chief Executive Officer

Email: [email protected]

The information contained in this document is recorded and expressed in good faith and on reliance of sources believed to be credible. However, no representation,warranty or undertaking or guarantee of whatever nature is made or given concerning the accuracy and/or the completeness of such information and opinions. In noway is this document to be construed as financial advice or as an offer to invest in any portfolio or investment managed by RealCap.

Abdullah Solomons

Investment Consultant

Email: [email protected]

Michael Wood

Investment Consultant

Email: [email protected]

Investment Information