September 2018 Aberdeen Standard Investments...• Aberdeen Standard Investments is a brand of the...

September 2018

Aberdeen Standard

Investments

For professional investors and financial advisors only – not for use by retail investors

Aberdeen Standard Investments is a brand of the investment businesses of Aberdeen Asset Management and Standard Life Investments.

1

• One of the largest investment houses globally

• Combined assets under management of €648.5 billion

• Geographically diverse – 50 office locations globally with investment

management in 24 offices

• Highly diversified business – by revenue, asset class, client and geography

• Aberdeen Standard Investments will offer a comprehensive range of

developed and emerging market equities and fixed income, multi-asset, real

estate and alternatives solutions

• Asset management is our business

• Aberdeen Standard Investments is a brand of the investment businesses of

Aberdeen Asset Management and Standard Life Investments

About Aberdeen Standard Investments

Total AuM €648.5 billion

Figures may appear not to add due to rounding. An exchange rate of £1:€1.12654 as at 31

December 2017 has been used. Source: Aberdeen Standard Investments, 31 December 2017

Equities27%

Fixed Income25%Multi-Asset

16%

Private Markets and Alternatives

4%

Real Estate7%

Quantitative12%

Cash/Liquidity9%

Macro Overview

3

Global Markets Performance YTD

Source: Financial Express Analytics, from 31 December 2017 to 31 August 2018, in EUR

4

The House View

The prospect of a trade war remains at the forefront of investors, and policymakers, minds

Investors are also concerned about global economic moderation, tighter monetary conditions, and

volatile politics – emerging markets are a particular area of sensitivity

We expect further progress in global equity markets driven by strong corporate profits reviving

confidence

Portfolios are looking for growth and diversification opportunities alongside the need for income in a

world of low yields

Focus on change

5

Monetary policy is changing slowly

The Federal Reserve and ECB plan to ‘taper’ from 2018

Source: National sources, Datastream, Aberdeen Standard Investments (as of Q2 2018)

-1,000

-500

0

500

1,000

1,500

2,000

2,500

3,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

US $ (billions)

European Central Bank Bank of Japan Federal Reserve Bank of England Total

Rolling 12 month change in central bank balance sheets, US $ converted at PPP exchange rates:

6

US growth outlook still favourable, supportive for earnings

Source: Datastream, 06 August 2018

EPS Growth Estimate for 2018

Source: Bloomberg, 31 July 2018

US GDP revised higher

After a Q1, strength in Q2 will continue until year end

2

2.1

2.2

2.3

2.4

2.5

2.6

2.7

2.8

2.9

3

Dec 17 Jan 18 Feb 18 Mar 18 Apr 18 May 18 Jun 18

%

US GDP Growth Forecast

0

5

10

15

20

25

Jun-17 Jun-18

%

S&P500 MSCI World

7

Investment Outlook

Global growth is supported

Overweight US, Europe, Japanese and Emerging Market equities

Underweight UK equities

Real assets with growth and yield suit this cycle

Attractive EM local currency sovereign bonds

Narrow corporate spreads – underweight investment grade debt

Short selected DM governments and looking at diversifiers

Underweight UK ILG, Core European and Japanese government debt

Overweight US TIPS & the Yen as diversifiers

Seeking benefits from corporate cash flow while monitoring spread volatility

8

Outlook favours diversification

Asset Class

Diversification

Enhanced

Diversification

Five year return and risk outlook

Source: Aberdeen Standard Investments, August 2018. Expected return is not an indication of future results. Returns are EUR hedged other than EM Debt Local.

Past performance is not a guide to future resultsAberdeen Standard Investments is a brand of the investment businesses of Aberdeen Asset Management and Standard Life Investments

Diversified Income

Fund

10

• The Standard Life Diversified Income Fund offers:

• Genuine diversification across a very broad range of asset

classes

• Managed by an experienced team drawing on a wealth of

resources across Aberdeen Standard Investments

• This gives several key benefits for investors:

• A targeted 4.5% yield

• …delivered with significantly lower volatility than equity

markets

• …from a range of tangible asset classes that investors can

understand, delivering income in a very transparent and

reliable way

Overview

Source: Aberdeen Standard Investments, 31 December 2017

11

Historically traditional asset classes have delivered…

Source: Aberdeen Standard Investments. Performance shown in USD terms. Equity represented by a blend of MSCI World Equity; Bonds by Citigroup WGBI USD Hedged; and the 50/50 portfolio a

50% equity, 50% bond blend monthly rebalanced. Data to 30 June 2018

Past performance is not a guide to future results

30 year total return index

0.00

1000.00

2000.00

3000.00

4000.00

5000.00

6000.00

7000.00

8000.00

9000.00

Equities (7.2%pa) Bonds (6.0%pa) 50/50 blend (6.9%pa)

12

…but face a challenging outlook

* As at February 2018 in EUR. Source: Aberdeen Standard Investments, June 2018

Expensive equity valuations and increasing risks

* As at February 2018 in EUR. Source: Aberdeen Standard Investments, June 2018

Structurally lower growth and bond yields

• Most developed economies are facing structurally lower growth due to

weakening demographics, substantial debt burdens and increasing

protectionism

• Given extremely low bond yields our 5-year expected return for

government bonds is 0.6% p.a.*

• Equity markets have had a strong run since the financial crisis but now

valuations are stretched. Our 5-year expected return is now 2.4% p.a.*

• Near-term risks include monetary tightening, trade wars and slowdown

in Chinese growth

Shiller CAPE (S&P 500 Price/10Y average earnings)

-2

0

2

4

6

8

10

12

14

France Germany Japan United Kingdom United States

0

5

10

15

20

25

30

35

40

45

50

18811889 18971906 1914 19221931 1939 19471956 19641972 1981 19891997 2006 2014

CAPE Current

13

• Our core philosophy:

• There are a number of asset classes with attractive return prospects but different return drivers

• Combining these in a diversified portfolio leads to that attractive return coming through in a more consistent fashion than any

one asset class in isolation

• The Diversified Income Fund provides this genuine asset class diversification in a daily dealt portfolio

• Key benefits of our approach:

• Attractive and reliable income stream

• Less susceptible to equity downturns

• Not excessively reliant on market timing or trading strategies

• Simple and transparent

So how can investors achieve reliable income in this more challenging environment?

Asset class

diversification

14

A rich opportunity set that can reduce reliance on equities and bonds

Capturing the breadth of opportunities

Source: Aberdeen Standard Investments

Gold

Government Bonds

Tail risk hedging

Investment Grade Credit

Absolute Return

Insurance Linked

Managed Futures

Alternative Risk Premia

High Yield and Loans

Emerging Market Debt

Asset Backed

Securities

Alternative Financing

Property

Infrastructure

Commodities

Developed Equity

Emerging Market Equity

Private Equity

Diversifying assets Low returnEquity driven

15

Leading global asset management company

• Insights from multiple offices across the world

Breadth of capability

• Expertise across a very broad range of asset classes

Diversified Assets strength

• A highly experienced team managing diversified portfolios

Harnessing the breadth and depth of resource

Providing a substantial advantage in managing genuinely diversified portfolios

Diversified

Assets

Equities

Fixed Income

Property

Quantitative

Strategies

Private Equity

Hedge Funds

Infrastructure

Real Assets

16

• Listed alternatives provide an ideal route to accessing illiquid

asset classes in a liquid form

• Similar to REITs but with a range of different underlying

alternative assets rather than just property

• The market has grown markedly over the past 10 years with

increasing focus on genuine diversifiers:

• £15bn in Infrastructure (Social, Renewables, Core)

• £10bn in specialist credit including Loans, ABS, Aircraft

Leasing, Marketplace Lending and Healthcare Royalties

• £4bn in other areas such as Litigation Finance and Insurance

Linked Securities

• Experience investing in the sector helps to influence key terms

of new offerings – fees, discount control management, etc.

Use of listed alternatives helps achieve fuller diversification

Source: Numis, June 2018


-

10,000.00

20,000.00

30,000.00

40,000.00

50,000.00

60,000.00

70,000.00

80,000.00

Jan 07 Jan 09 Jan 11 Jan 13 Jan 15 Jan 17

Market Cap £m

Infrastructure Specialist Debt Property Private Equity Hedge

Growth of the listed alternative market

17

Investment overview

• Invests in operational solar and onshore wind farms

Return

• Target 7-9% return, including a yield of 5 - 6%

Risk

• Some exposure to power prices but dampened by stable revenues from

subsidies

• No construction risk or economic exposure

Investment route

• Held in the Aberdeen Diversified Growth Fund since inception in July 2013

• Held alongside other renewables funds such as John Laing Environmental and

Next Energy Solar

Infrastructure: The Renewables Infrastructure Group

Source: The Renewables Infrastructure Group

Selected for illustrative purposes only to demonstrate management style and not as an indication of future performance or investment recommendation.

Asset exposures – The Renewables Infrastructure Group

18

Investment overview

• UK social housing sector aims to provide cheaper rental housing to low

income groups

• A severe shortage of capital but reliable long-dated, inflation-linked,

government-sourced revenues makes this an attractive investment

opportunity

Returns

• Target returns in excess of 8% p.a., including a 5% yield growing with

inflation

Risk

• Defensive profile given inflation linkage and government support

Investment route

• Three listed investment companies have been established and are the

most natural holders of these long-term assets

• Social good of providing more affordable housing for the disabled, elderly

and lower income groups

Property: Social housing


Source: Triple Point Social Housing REIT

19

Investment overview

• Diversified portfolio of bonds issued by over 15 emerging market

governments

Returns

• Attractive yield of 7.6% with wide spread over developed markets

Risk

• The asset class has delivered (and we believe will continue to deliver)

significantly lower volatility and downside risk than most investors think:

• Historic volatility of 7.3% (versus 12.8% for equities)

• Worst 12-month return -8.0% (versus -42.5% for equities)

Investment route

• Active portfolio managed by Aberdeen’s EM debt team comprising 37

investment professionals

Emerging Market Local Currency Bonds

Source: Aberdeen Standard Investments, Bloomberg, June 18. EM Local index is JPM GBI-EM Global Diversified. Returns on index are expressed relative to currency funding basket used within DMA

portfolios: equally weighted across AUD, NZD, CAD, NOK, SEK and GBP. Developed bond index is JPM GBI Global Index. The JPM GBI-EM Global Diversified index is constrained to a maximum weight of

10% to any one country and comprises 16 countries including Brazil, Colombia, Hungary, Indonesia, Malaysia, Mexico, Poland, Russia, South Africa, Thailand and Turkey

Emerging Market Bonds Exposure

Rolling 12-month returns for EM local and equities

Mexico, 3.5%

Brazil, 2.8%

Russia, 2.7%

Indonesia, 2.7%

South Africa, 2.6%

India, 2.1%

Colombia, 1.6%

Malaysia, 1.6%

Poland, 1.6%

Turkey, 1.5%

Other, 4.5%

20

Listed Equity17.9%

Property5.6%

Infrastructure16.2%

Loans1.0%

Asset-Backed Securities10.5%

Emerging Market Bonds27.1%

Absolute Return5.6%

Insurance Linked4.6%

Special Opportunities8.5%

Cash3.0%

A genuinely diversified portfolio

Source: Aberdeen Standard Investments, 30 June 2018. Figures may not add up due to rounding

Aberdeen Global Diversified Income Fund

Unconstrained flexible asset

allocationSimple and accessibleGenuine diversification

21

Income from diversified sources and comfortably in excess of target

Source: Aberdeen Standard Investments, 30 June 2018. Expected return is not an indication of future results.

Asset Class Fund Allocation (%) Prospective Yield^^ (%) Contribution (%)

Listed equity 17.9% 3.0% 0.5%

Property 5.6% 4.3% 0.2%

Infrastructure 16.2% 5.0% 0.8%

Loans 1.0% 4.6% 0.1%

Asset backed securities 10.5% 4.8% 0.5%

Emerging market bonds 27.1% 7.6% 2.1%

Absolute return 5.6% 4.8% 0.3%

Insurance linked 4.6% 6.0% 0.3%

Special opportunities 8.5% 5.7% 0.5%

Cash 3.0% 0.0% 0.0%

Total 100% 5.2% 5.2%

22

Flexible asset allocation reducing reliance on traditional asset classes

Historic data relates to the Diversified Growth Strategy (UK range)

Source: Aberdeen Standard Investments, 30 June 2018


Asset Allocation – Aberdeen Diversified Growth Fund

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

De

c-2

011

Feb

-2012

Apr-

2012

Jun-2

012

Aug-2

012

Oct-

2012

De

c-2

012

Fe

b-2

013

Apr-

2013

Jun-2

013

Aug-2

013

Oct-

2013

De

c-2

013

Feb

-2014

Apr-

2014

Jun-2

014

Aug-2

014

Oct-

2014

De

c-2

014

Feb

-2015

Apr-

2015

Jun-2

015

Aug-2

015

Oct-

2015

De

c-2

015

Feb

-2016

Apr-

2016

Jun-2

016

Aug-2

016

Oct-

2016

De

c-2

016

Feb

-2017

Apr-

2017

Jun-2

017

Aug-2

017

Oct-

2017

De

c-2

017

Feb

-2018

Apr-

2018

Jun-2

018

Listed equity Private equity Property Infrastructure High yield and loans

Asset backed securities Emerging market bonds Absolute return Insurance linked Special opportunities

Investment grade Government bonds Cash (and put options) Gold

23

Generating attractive returns since inception…

Source: Aberdeen Standard Investments, 31 July 2018. Performance is converted EUR Z gross performance of £ Diversified Growth fund to 30 June 2016 and Aberdeen Global – Diversified Growth Fund Z

gross performance from 01 July 2016 to 31 July 2018. Performance is supplemental to the composite. Cash represented by 1 month Euribor. Euribor represented by 1 month Euribor. Inception: 1 Nov 11.

Performance is shown gross of fees and does not reflect investment management fees. Had such fees been deducted, returns would have been lower. Past performance is not a reliable guide to future

performance. This is for illustrative purposes only. This is not investment advice.

2011 2012 2013 2014 2015 2016 2017

DGF 1.4 6.3 1.6 8.1 2.7 6.4 9.8

Performance 1m 3m 6m YTD 1y 3yr p.a. 5yr p.a. Since inception p.a.

AG-DGF (Hdg to EUR) 2.3% 1.2% 1.1% 1.3% 3.4% 5.5% 5.1% 5.5%

Euribor 0.0% -0.1% -0.2% -0.2% -0.4% -0.3% -0.2% 0.0%

90

100

110

120

130

140

150

Oct-

11

Jan-1

2

Apr-

12

Jul-1

2

Oct-

12

Jan-1

3

Apr-

13

Jul-1

3

Oct-

13

Jan-1

4

Apr-

14

Jul-1

4

Oct-

14

Jan-1

5

Apr-

15

Jul-1

5

Oct-

15

Jan-1

6

Apr-

16

Jul-1

6

Oct-

16

Jan-1

7

Apr-

17

Jul-1

7

Oct-

17

Jan-1

8

Apr-

18

Jul-1

8

Diversified Growth Strategy (Hdg to EUR) Euribor

24

Equity downturns of more than 10%

-11.4%

-12.8%

-15.2%

-1.3%

-3.4%

-4.4%

-20%

-15%

-10%

-5%

0%

19 March 2012 - 4 June2012

20 July 2015 - 29September 2015

1 December 2015 - 11February 2016

Equity* Diversified Growth Strategy

…with relatively low volatility and resilience in equity market downturns

* Equity represented by MSCI World Equity (EUR hedged)

Source: Aberdeen Standard Investments, 31 July 2018. Aberdeen converted EUR performance of £ Diversified Growth (UK) fund to 30/6/2016. Aberdeen Global – Diversified Growth Fund portfolio

performance from 1/7/2016 to 31/3/2018. Performance is supplemental to the composite. Cash represented by 1 month Euribor


Volatility (%pa)

4.4%

9.3%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

Since inception

AG-DGF (Hdg to EUR) Global Equities (Hdg to EUR)

25

Geographically diversified

* Non-geographic includes insurance-linked, absolute return, aircraft leasing, litigation finance and cash. ** Non-economic includes social/renewable infrastructure and social housing

Source: Aberdeen Standard Investments, 30 June 2018


Emerging Market Bonds Exposure

Listed Equity Exposure

Listed Equity17.9%

Emerging Market Bonds27.1%

North America6.0%

UK8.1%

Europe (ex-UK)5.4%

Other1.0%

Non-economic18.1%

Non-geographic16.4%

North America8.1%

Japan2.8%

Asia Pacific (ex-Japan

2.0%

Europe (ex-UK)2.3%

UK1.6%

Emerging Markets1.1%

17.9%

Mexico, 3.5%

Brazil, 2.8%

Russia, 2.7%

Indonesia, 2.7%

South Africa, 2.6%

India, 2.1%

Colombia, 1.6%

Malaysia, 1.6%

Poland, 1.6%

Turkey, 1.5%

Other, 4.5%

27.1%

26

• The Standard Life Diversified Income Fund:

• Genuine diversification across a very broad range of asset

classes

• Managed by an experienced team drawing on a wealth of

resources across Aberdeen Standard Investments

• This allows us to:

• Deliver a targeted 4.5% yield

• …with significantly lower volatility than equity markets

• …from a range of tangible asset classes that investors can

understand, delivering income in a very transparent way

Conclusion

Source: Aberdeen Standard Investments, 31 December 2017

Appendices

28

• Global equities fell by 17.3% between April 2015 and February

2016, notably due to concerns over China

• The listed alternatives that we currently invest in returned 2.9%

on average over this time period

• Defensive areas such as social infrastructure delivered good

returns as did uncorrelated areas such as insurance linked and

litigation finance

• Renewable energy companies had small negative returns

reflecting lower power price expectations due to the lower oil

price. Given the oil price fell by more than 50% this highlights

that these companies have a relatively low sensitivity to global

energy prices.

Diversification benefits of listed alternatives: case study

Source: Aberdeen Standard Investments / Bloomberg. Performance shown from 28 April 2015 to 11 February

2016. Global equities represented by MSCI World (hedged to GBP); the listed alternatives shown represent all

held in Diversified Assets portfolios at the time of this analysis in December 2017 that existed for the whole of

this period, with the exception of private equity and CLO equity holdings (which are held purely for higher return

expectations than for diversification benefits). The average is a simple average of all of these returns. Period

chosen is the largest drawdown for equities over the past 5 years


April 2015 to February 2016

-30

-20

-10

0

10

20

30

40

50

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Global Equities (-17.3%) Listed Alt. Average (2.9%)

29

Investment overview

• Diversified global portfolio of social infrastructure projects with long-term,

government-backed, inflation-linked revenues

Returns

• Targets 7 - 8% p.a. return, yielding c4%

Risk

• Assets are predominately availability-based (i.e. do not rely on volume of

traffic or other level of usage)

• Defensive characteristics given government backing and inflation linkage

Investment route

• Held alongside other social infrastructure investment companies such as HICL

and International Public Partnerships

Infrastructure: BBGI


Source: Bilfinger Berger Global Infrastructure

Portfolio geographical split

UK 39%

Cont. Europe 9%

Canada 28%

USA 5%

Australia 19%

Global portfolio with c.40 assets; all located in

AA to AAA rated countries. Examples below:

30

Asset-Backed Securities – Mezzanine

Selected for illustrative purposes only to demonstrate management style and not as an indication of future performance or investment recommendation

Source: Aberdeen Standard Investments, TwentyFour, Barclays, 29 March 2018


CLO/Corporate spreads

0

100

200

300

400

500

600

700

800

AAA AA A BBB BB B

CLOs Corporate Bonds (USD)

>2% additional

spread

Investment overview

• ABS market is multi-trillion dollar primarily covering securitisations of

residential/commercial mortgages and corporate loans

Returns

• Various sections of the ABS market (e.g. CLOs) offer a material excess

return over corporate bonds for a similar level of credit risk

Risk

• Higher risk premium largely reflects perceived complexity, lingering ABS

negative sentiment from US sub-prime crisis and regulatory constraints

• Mark-to-market risk of technical selling

Investment route

• Selection of specialist managers including open-ended funds managed by

TwentyFour, Prytania and Fair Oaks

31

Insurance-linked: Catco



Investment overview

• Invests in contracts providing cover against insurance losses due to

extreme natural catastrophes

Returns

• Expected net return of Libor +10%, yield in excess of 5%

Risk

• Diversified across perils to mitigate impact of any one extreme event

• Asset class has no economic exposure and hence is uncorrelated to

equities and other asset classes

Investment route

• Catco provide higher expected return than cat bonds

• Aberdeen multi-asset exposure since 2015

32

Aircraft leasing: Doric Nimrod Air Three

* As at 31 March 2018. Selected for illustrative purposes only to demonstrate management style and not as an indication of future performance or investment recommendation.

Source: Doric Nimrod Air Three


Investment overview

• Portfolio comprises four Airbus A380 aircraft which are on long term leases

to Emirates Airline

• A mixture of equity and debt is used to purchase the aircraft

Returns

• Long-term return driven by leasing income as well as from the potential

sale of the aircraft at the end of the leases

• Current Dividend Yield of 8.1%*

Risk

• Emirates defaults and the manager can’t re-lease the planes

• Final re-sale value of planes may be lower (or higher) than expected

33

Litigation finance: Burford


Source: Burford Capital, September 2017


Investment overview

• Provides third-party financing for commercial litigation

Returns

• Highly attractive returns on offer given lack of competition from banks and

specialist expertise

• Delivered strong returns since inception in

October 2009

Risk

• Risk of individual case losses mitigated by having a diversified portfolio

• No economic exposure and hence no correlation to other asset classes

Investment route

• Burford is the leading provider of third-party financing for commercial

litigation

• Aberdeen multi-asset exposure since inception in 2009

34

Special opportunities: Funding Circle

©Funding Circle. Company selected for illustrative purposes only to demonstrate Aberdeen Standard Investments' investment management style and not as an investment recommendation or indication of

future performance. Source: Funding Circle website (www.fundingcircle.com/statistics)


Cumulative Net Lending to UK Small Businesses

£ m

illi

on

s

-3,000-2,500

-2,000

-1,500

-1,000

-500

0

500

1,000

1,500

-2,429

1,097

Mar

14

Dec 1

3

Jun 1

4

Sep 1

4

Dec 1

4

Mar

15

Jun 1

5

Sep 1

5

Dec 1

5

Mar

17

Jun 1

6

Sep 1

6

Dec 1

6

Mar

16

UK Banks

Funding Circle

Scenario Assumptions Made Projected return p.a.

Base scenario

(no recession)

• Existing investor – all outstanding SME loans

(06/17)6.7%

PRA 2017

scenario (severe

recession)

• GDP growth decreases from 2.3% to -4.7%

• Unemployment increases from 4.8% to 9.5%

• CPI growth increases from 1.2% to 5.1%

• BOE interest rate increases from 0.25% to

4.0%

• 5 year gilt rate increases from 0.6% to 5.9%

5.0%

Stress test results

Investment overview

• Direct lending platform providing loans to small business in the UK, US and

continental Europe

• Positive social impact, supported by national and local government

development authorities

Returns

• Targeting 7 - 9% p.a return net of losses with a yield of c6%

Risk

• Credit risk mitigated by robust credit approval process

• Resilient to the Prudential Regulatory Authority’s stress test scenario, as

undertaken by all UK banks

Investment route

• Closed-end fund investing in Funding Circle platform with no investment

management fee

35

Healthcare Royalties: BioPharma Credit


Source: Aberdeen Standard Investments, BioPharma Credit, September 2017


Investment overview

• Listed investment company providing exposure to a diversified portfolio of

debt backed by assets or royalties from biotechnology firms

Returns

• Targets 8-9% expected return and 7% yield

Risk

• Key risk is that royalty income is markedly lower than expected – mitigated

by expertise of fund manager

• Significant diversification benefits as risks are very different to others in the

portfolio

Investment route

• Managed by Pharmakon Advisors, an experienced healthcare royalties

investor

36

Equities: lower volatility income approach

* 31 July 2015 to 31 August 2015 and 31 December 2015 to 15 February 2016. Selected for illustrative purposes only to demonstrate management style and not as an indication of future performance or

investment recommendation. Source: Aberdeen Standard Investments, performance to 31 March 2018. Inception date May 2015. Returns are in USD. Composite performance shown net of fees


Return drivers Investment overview

• Actively managed equity portfolio aimed at outperforming global equities

over the long-run with around 85% of the volatility

• Targets 140% of the dividend yield of the MSCI World index

Returns

• Stock selection reflects a series of investment themes exploiting market

inefficiencies

Risk

• At least 150 underlying securities to ensure diversification

• Smart implementation avoids possible crowded minimum volatility trade

Investment route

• Developed by Aberdeen’s Quantitative Equity team who manage £23bn in

active equity portfolios

• Tailoring a proven internal skillset to enhance the income generation within

the Fund

Income strategy – performance since inception

Value

Inexpensive

stocks

Quality

Financially

healthy firms

Momentum

Trending

stocks

Small size

Smaller

companies

Low volatility

Lower risk

stocks

9.5 9.2

-6.2 -5.0

3.5

8.610.8

-6.6-9.4

2.4

-15

-10

-5

0

5

10

15

20

Return (%) Volatility (%)

ELVIS MSCI AC World

Performance in equity

down-markets* (%)

37

Investment Organisation Structure

Source: Aberdeen Standard Investments

Guy

Stern

Multi-

Asset &

Macro

Devan

Kaloo

Equities

Craig

MacDonald

Fixed

income

Andrew

McCaffery

Strategic

Client

Investments

Brian

Fleming

Structured

Solutions

Sean Phayre

Quantitative

Investing

David

Paine

Real

Estate

Pertti

Vanhanen

Real

Estate

Peter

McKellar

Private &

Infrastructure

Equity

Mandy Pike

Investment

Execution

Archie

Struthers

Governance

& Oversight

Bambos

Hambi

Head of

Multi-

Manager

Strategies

Russell

Barlow

Global Head

of

Alternative

Investment

StrategiesMike Brooks

Head of

Diversified

Assets

Andrew

Lister

Head of

Closed

End Fund

Strategies

James

Hughes

Global

Head of

Strategic

Client

Solutions

Rod Paris

CIO

38

• Dedicated team managing a small number of genuinely diversified multi-asset portfolios

• Highly experienced in allocating across a broad range of traditional and alternative asset classes

• Harnessing the breadth and depth of ASI’s resources across a wide range of asset classes

Diversified Assets team

Source: Aberdeen Standard Investments, January 2018

Tony Foster

Portfolio manager

Mike Brooks

Head of Diversified

Assets

Alan Murray

Portfolio manager

Sean Flanagan

Portfolio manager

Emma Scott

Analyst

Kenneth McMillan

Analyst

Kevin Glover

Assistant Portfolio

manager

Appendices – Composite data

40

Aberdeen multi asset composite performance

Unless otherwise stated, performance is shown gross of fees and

does not reflect investment management fees. Had such fees been

deducted, returns would have been lower.

Source: Aberdeen Standard Investments, BNP Paribas and StatPro

Period returns to 31 December 2017

Year Composite

return gross

Number of portfolios

(*throughout period)

Dispersion Market value at

end of period

Rolling 3 months1.48% <5 n/a 379,650,501

Year to date8.86% <5 n/a 379,650,501

1 Year8.86% <5 n/a 379,650,501

2 Years p.a.8.54% <5 n/a 379,650,501

3 Years p.a.6.82% <5 n/a 379,650,501

4 Years p.a.7.36% <5 n/a 379,650,501

5 Years p.a.6.35% <5 n/a 379,650,501

Calendar year returns

Year Composite

return gross

Number of portfolios

(*throughout period)

Dispersion Market value at

end of period

Total firm assets

2017 8.86% <5 n/a 379,650,501 273,580,434,818

2016 8.23% <5 n/a 398,168,787 273,648,495,940

2015 3.45% <5 n/a 168,747,689 260,113,422,464

2014 8.99% <5 n/a 111,091,398 295,170,314,057

2013 2.41% <5 n/a 97,963,651 171,284,592,962

2012 7.05% <5 n/a 47,573,819 174,061,180,956

2011 (Dec) 0.68% <5 n/a 40,457,686 152,927,964,997

Performance statistics (net of institutional fees)

Beta to MSCI World Index Volatility^ Sharpe Ratio

Since Inception 0.3 4.2 1.3

Composite: Multi Asset: Diversified Growth (UK)

Composite inception: 01 December 2011

Base currency: GBP (Reported in GBP)


41


As of: 30-Nov-2017

Definition of the Firm

Aberdeen Asset Management plc ("Aberdeen" or "the Firm") is defined as all

portfolios managed globally by subsidiaries of Aberdeen Asset Management plc,

excluding Property, Private Equity, Private Client and Lloyds Syndicate portfolios.

Aberdeen is the global brand under which all products are now marketed. The

global Firm inception date is 1st December 2005; the Firm is compliant from 1st

January 1996; and includes divisions that either were, or were part of, legacy

compliant firms, some of which are compliant from earlier dates. The Firm

includes Artio Global Investors from 1st June 2013, Scottish Widows Investment

Partnership from 1st April 2014 and Arden Asset Management and Advance

Emerging Capital from 1st January 2016. Aberdeen Asset Management plc and

Standard Life plc merged as of 14th August 2017 and the two firms will be

working towards integration. The Firm AUM and this composite only includes

Aberdeen Asset Management plc legacy assets at this time. The Firm’s assets

are represented by the published AUM of Aberdeen Asset Management plc with

deductions for the excluded divisions disclosed above. The legacy track records

satisfy the GIPS portability criteria and have been linked with the track record of

the Aberdeen global Firm. Composite returns, start date and composite and firm

assets reported prior to acquisitions represent those of the legacy firm which

managed the product at the time. Changes in the firm organisation, investment

style or personnel have not caused alterations of historical composite

performance.

GIPS Compliance

Aberdeen claims compliance with the Global Investment Performance Standards (GIPS)

and has prepared and presented this report in compliance with the GIPS standards.

Aberdeen has been independently verified for the periods to 30th September 2016. The

verification report is available upon request. Verification assesses whether (1) the firm has

complied with all the composite construction requirements of the GIPS standards on a

firm-wide basis and (2) the firm's policies and procedures are designed to calculate and

present performance in compliance with the GIPS standards. Verification does not ensure

the accuracy of any specific composite presentation. The effective date of compliance is

1st January 1996. The inception date of the composite is 1 Dec 11 and it was created on 6

Dec 11. A complete list of the Firm's composites, and policies for valuing portfolios,

calculating performance and preparing compliant presentations, is available on request.

Composite Description

The composite comprises all discretionary portfolio managed to Aberdeen Asset

Management's diversified growth strategy in relation to a Libor based benchmark.

Composite methodology

Returns are time-weighted total rates of return including cash and cash equivalents,

income and realised and unrealised gains and losses. Returns are shown net of non-

recoverable tax, whilst recoverable tax is included on a cash basis. Composites results

are weighted by individual portfolio size, using start of period market values. Portfolios

are valued at least monthly or on the date of any contribution/withdrawal greater than

8.49% within 1 month. Annual returns are calculated using geometric linking of monthly

returns. Exchange rates used are WMR 16:00 Closing Spot Rates. Composites may

contain portfolios of different base currencies, translated into a common currency for

composite returns using the exchange rates stated above. A fund becomes eligible for

inclusion the first full calendar month after funding. Inclusion may be deferred in cases

where it has not been possible to implement the investment strategy. Terminated funds

leave composites at the end of the calendar month before official notification of

termination is received. Results include all discretionary, fee paying accounts of the Firm.

Aberdeen multi asset composite

42


As of: 30-Nov-2017

The dispersion of annual returns is measured by the standard deviation among

asset-weighted portfolio returns represented within the composite for the full year.

Dispersion is not calculated for composites with less than five accounts for the

whole period. Additional information on policies for calculating and reporting

returns is available on request.

Presentation of Results

Gross returns are presented before management, custodial and other fees but

after all trading expenses. Net returns are calculated after the deduction of a

representative management fee.

Derivative Instruments

Derivatives may be used for hedging and/or for investment purposes. Derivatives

will not be used for leverage

Past performance is not an indication of future results.

Aberdeen multi asset composite

43

Aberdeen Global Diversified Income Fund

Important Information

For professional investors only – not for public distribution

The following risk factors should be carefully considered before making an

investment decision:

• Bonds are affected by changes in interest rates, inflation and any decline in

creditworthiness of the bond issuer. Bonds that produce a higher level of

income usually also carry greater risk as such bond issuers may not be able to

pay the bond income as promised or could fail to repay the capital amount

used to purchase the bond. Where a bond market has a low number of buyers

and/or a high number of sellers, it may be harder to sell particular bonds at an

anticipated price and/or in a timely manner.

• The Sub-fund can use derivatives in order to meet its investment objectives or

to protect from price and currency movements. This may result in gains or

losses that are greater than the original amount invested.

• Emerging markets or less developed countries may face more political,

economic or structural challenges than developed countries. This may mean

your money is at greater risk. The Fund may also invest in Frontier Markets

which involves similar risks, but to a greater extent since they tend to be even

smaller, less developed, and less accessible than other Emerging Markets.•

• Contingent convertible bonds can automatically convert into shares or be

written down if the financial strength of the issuer falls in a certain way. This

may result in substantial or total losses of the bond value.

• Investments in REITs and companies engaged in the business of real estate

may be subject to increased liquidity risk and price volatility due to a variety of

factors, including local, regional and national economic and political

conditions, interest rates and tax considerations.

• A full list of risks applicable to this Fund can be found in the Prospectus, which

is available on request or at our website aberdeen-asset.com.

Disclaimer

44

Aberdeen Global Diversified Growth Fund

Important Information

For professional investors only – not for public distribution

The following risk factors should be carefully considered before making an

investment decision:

• The Fund can use derivatives in order to meet its investment objectives or to

protect from price and currency movements. This may result in gains or losses

that are greater than the original amount invested.

• Emerging markets or less developed countries may face more political,

economic or structural challenges than developed countries. This may mean

your money is at greater risk. The Fund may also invest in Frontier Markets

which involves similar risks, but to a greater extent since they tend to be even

smaller, less developed, and less accessible than other Emerging Markets.

• Bonds are affected by changes in interest rates, inflation and any decline in

creditworthiness of the bond issuer. The fund's portfolio may have significant

exposure to bonds that typically have lower ratings. Bonds that produce a

higher level of income usually also carry greater risk as such bond issuers

may not be able to pay the bond income as promised or could fail to repay the

capital amount used to purchase the bond. Where a bond market has a low

number of buyers and/or a high number of sellers, it may be harder to sell

particular bonds at an anticipated price and/or in a timely manner.

• Contingent convertible bonds can automatically convert into shares or be

written down if the financial strength of the issuer falls in a certain way. This

may result in substantial or total losses of the bond value.

• Performance may be strongly influenced by movements in currency rates. The

value of your investment will either rise or fall in response to changes in

foreign exchange rates between the base currency of the fund, and the

currencies of the securities held by the fund.

• Investments in REITs and companies engaged in the business of real estate

may be subject to increased liquidity risk and price volatility due to a variety of

factors, including local, regional and national economic and political

conditions, interest rates and tax considerations.

• A full list of risks applicable to this Fund can be found in the Prospectus, which

is available on request or at our website aberdeen-asset.com.

Disclaimer

45

For professional Investors only - Not for public distribution

Past performance is not a guide to future results. The value of investments, and the

income from them, can go down as well as up and your clients may get back less than the

amount invested.

The views expressed in this presentation should not be construed as advice on how to

construct a portfolio or whether to buy, retain or sell a particular investment. The

information contained in the presentation is for exclusive use by professional

customers/eligible counterparties (ECPs) and not the general public. The information is

being given only to those persons who have received this document directly from

Aberdeen Asset Management (AAM) and must not be acted or relied upon by persons

receiving a copy of this document other than directly from AAM. No part of this document

may be copied or duplicated in any form or by any means or redistributed without the

written consent of AAM.

The information contained herein including any expressions of opinion or forecast have

been obtained from or is based upon sources believed by us to be reliable but is not

guaranteed as to the accuracy or completeness.

The Fund is a Luxembourg-domiciled UCITS fund, incorporated as a Société Anonyme

and organised as a Société d’investissement à Capital Variable (a “SICAV”). The

information contained in this marketing document should not be considered as an offer, or

solicitation, to deal in the shares of any securities or financial instruments. It is not

intended for distribution or use by any person or entity who is a citizen or resident of or

located in any jurisdiction where such distribution, publication or use would be prohibited.

The Fund is not registered under the United States Securities Act of 1933, nor the United

States Investment Company Act of 1940 and therefore may not directly or indirectly be

offered or sold in the United States of America or any of its states, territories, possessions

or other areas subject to its jurisdiction or to or for the benefit of a United States Person.

FTSE International Limited (‘FTSE’) © FTSE 2018. ‘FTSE®’ is a trade mark of the London

Stock Exchange Group companies and is used by FTSE International Limited under

licence. RAFI® is a registered trademark of Research Affiliates, LLC. All rights in the

FTSE indices and / or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor

its licensors accept any liability for any errors or omissions in the FTSE indices and / or

FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without

FTSE’s express written consent.

The MSCI information may only be used for your internal use, may not be reproduced or

redisseminated in any form and may not be used as a basis for or a component of any

financial instruments or products or indices. None of the MSCI information is intended to

constitute investment advice or a recommendation to make (or refrain from making) any

kind of investment decision and may not be relied on as such. Historical data and

analysis, should not be taken as an indication or guarantee of any future performance

analysis forecast or prediction. The MSCI information is provided on an “as is” basis and

the user of this information assumes the entire risk of any use made of this information.

MSCI, each of its affiliates and each other person involved in or related to compiling,

computing or creating any MSCI information (collectively, the “MSCI” Parties) expressly

disclaims all warranties (including without limitation, any warranties of originality,

accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a

particular purpose) with respect to this information. Without limiting any of the foregoing,

in no event shall any MSCI Party have any liability for any direct, indirect, special,

incidental, punitive, consequential (including, without limitation, lost profits) or any other

damages (www.msci.com).

Disclaimer

http://www.msci.com/

46

Before investing, investors should consider carefully the investment objective, risks,

charges, and expenses of a fund. This and other important information is contained in the

prospectus, which can be obtained from a financial advisor and are also available on

www. aberdeen-asset.com. Prospective investors should read the prospectus carefully

before investing. Subscriptions for shares in the Fund may only be made on the basis of

the latest prospectus and relevant Key Investor Information Document (KIID) which

provides additional information as well as the risks of investing and may be obtained free

of charge from Aberdeen Asset Managers Limited, 10 Queens Terrace, Aberdeen, AB10

1YG, Scotland and are also available on www.aberdeen-asset.com.

Issued by Aberdeen Asset Managers Limited. Registered in Scotland

No.108419.Registered Office: 10 Queen’s Terrace, Aberdeen, AB10 1XL. Authorised and

regulated by the Financial Conduct Authority in the United Kingdom. Aberdeen Asset

Managers Limited reserves the right to make changes and corrections to any information

in this document at any time, without notice.

Subscriptions for investment in Aberdeen Global may only be made on the basis of the

relevant prospectus, relevant Key Investor Information Document (KIID) and most recent

annual financial statements, and semi-annual financial statements if published thereafter.

These documents and the articles of incorporation are available in English/

Italian/German/ French free of charge on www.aberdeen-asset.com. In Italy these

documents can be obtained from Aberdeen Asset Managers Limited, Italian Branch, Via

Dante 16, IT 20121, Milano, or from the Paying Agent, State Street Bank S.p.A, 10 Via

Ferrante Aporti, 20125 Milano and are also available on www.aberdeen-asset.it.In

Switzerland these documents along with the Fund’s articles of association can be

obtained from the Fund’s Representative and Paying Agent, BNP Paribas Securities

Services, Paris, succursale de Zurich, Selnaustrasse 16, CH 8002 Zürich, Switzerland

(Tel. 058 212 63).

Issued in Switzerland by Aberdeen Asset Managers Switzerland AG (“AAMS”). Registered

in Switzerland No. CHE-114.943.983. Registered

Office: Schweizergasse 14, 8001 Zurich. Authorised by the Swiss Financial Market

Supervisory Authority (FINMA) as distributor of collective

investment schemes.

DH ID: GB-270718-69362-3

Disclaimer

Subscriptions for investment in Aberdeen Global may only be made on the basis of the

relevant prospectus, relevant Key Investor Information Document (KIID) and most recent

annual financial statements, and semi-annual financial statements if published thereafter.

These documents and the articles of incorporation are available in English/

Italian/German/ French free of charge on www.aberdeen-asset.com. In Italy these

documents can be obtained from Aberdeen Asset Managers Limited, Italian Branch, Via

Dante 16, IT 20121, Milano, or from the Paying Agent, State Street Bank S.p.A, 10 Via

Ferrante Aporti, 20125 Milano and are also available on www.aberdeen-asset.it.In

Switzerland these documents along with the Fund’s articles of association can be

obtained from the Fund’s Representative and Paying Agent, BNP Paribas Securities

Services, Paris, succursale de Zurich, Selnaustrasse 16, CH 8002 Zürich, Switzerland

(Tel. 058 212 63).Issued in Switzerland by Aberdeen Asset Managers Switzerland AG

(“AAMS”). Registered in Switzerland No. CH-020.3.033.962-7. RegisteredOffice:

Schweizergasse 14, 8001 Zurich. Authorised by the Swiss Financial Market Supervisory

Authority (FINMA) as distributor of collectiveinvestment schemes.“

In Germany these documents can be obtained from Aberdeen Asset Managers Limited

Deutschland Branch, Bockenheimer Landstraße 25, D-60325 Frankfurt am Main or from

the Paying Agent Marcard, Stein & Co. AG, Ballindamm 36, D-20095 Hamburg, in Austria

from the Fund's Representative and Paying Agent Raiffeisen Zentralbank

ÖsterreichAktiengesellschaft, Am Stadtpark 9, A-1030 Wien.

Aberdeen Global have been registered with the Comisión Nacional del Mercado de

Valores under the number 107

Brokers Ireland

Why the Diversified Income Fund?

The diversification across a very broad range of asset classes gives three key benefits for

investors:

▪ Firstly, the fund accesses a far broader range of income-generating asset classes that

helps to generate the targeted 4.5%1 gross annual yield.

▪ Secondly, this diversification means that the attractive level of income is delivered with

significantly lower volatility than equity markets.

▪ Finally, the fund invests in a range of tangible asset classes that investors can

understand, delivering income in a very transparent way.

1 This is an internal performance target which the investment manager aims to achieve at the date of this document. This target is not based on past performance, may be subject to

change and cannot be guaranteed.

What's the target market?

▪ Post retirement

▪ The fund, with a target income of 4.5% gross p.a., is a natural fit for the post retirement market.

▪ Particularly the ARF market which has been one the fastest growth areas over the last 10 years or so.

▪ As part of a diversified portfolio, the fund can help investors generate investment returns to accommodate their income requirements, such as imputed distribution.

▪ Deposits

▪ Potential to generate greater returns than currently available on deposit.

▪ Although a higher risk investment, the volatility of the fund is much lower than an equity only investment and as such may be a suitable option for investors looking to re-enter investment markets.

MyFolio

MyFolio III Asset Mix – 1 Aug 2018

Growth Assets Active III Market III

Equities

UK equities 1.8% 3.5%

US equities 13.0% 14.4%

European equities 15.0% 18.8%

Japanese equities 5.2% 4.6%

Asia-Pacific equities 3.4% 3.6%

Emerging Markets equities 3.9% 3.6%

BondsEmerging Markets Local Currency bonds 2.5% 1.9%

Global High Yield bonds 3.3% 4.1%

PropertyUK Real Estate 2.6% 3.2%

Global REITs 5.1% 6.4%

Abs Ret Multi-Asset Absolute Return 12.8% ---

Total Growth Assets 68.6% 64.1%

Defensive Assets Active III Market III

BondsCorporate bonds 22.7% 34.9%

Absolute Return Bonds 7.2% ---

Cash Cash 1.5% 1.0%

Total Defensive Assets 31.4% 35.9%

Total 100.0% 100.0%

Risk Reward Consistency

* Inception and volatility for Market range refers to an inception date of 27/1/14 and for Active range 11/6/12. Euro currencySource: FE Analytics, 31 August 2018

Performance % VolatilityVolatility

as

12 Months

Return

3 Years

Annualised Return

5 Years

Annualised Return

Launch*

Annualised Return

3 Years

Std Dev

% of Global Equity

Volatility

MyFolio Active I -0.2 1.4 3.2 3.8 2.9 21.9%

MyFolio Active II 0.9 2.1 4.2 5.0 4.2 31.8%

MyFolio Active III 2.2 2.7 5.3 6.3 5.7 43.0%

MyFolio Active IV 3.5 3.3 6.5 7.7 7.2 54.4%

MyFolio Active V 4.6 4.1 7.4 8.7 8.8 66.0%

MyFolio Market I 0.7 2.1 3.3 3.3 24.7%

MyFolio Market II 2.8 3.6 4.9 5.2 38.9%

MyFolio Market III 5.2 4.9 6.4 7.2 54.0%

MyFolio Market IV 7.4 6.1 7.9 9.3 69.9%

MyFolio Market V 9.8 7.4 9.3 11.5 86.4%

Standard Life update

Pricing Flexibility

Special Offer to 31 December 2018

▪ Amounts > €50,000, 103% Allocation, 0.25% rebate

▪ MyFolio Market 0.70% AMC

▪ Diversified Income Fund 1.10% AMC

How are we supporting you?

Delivering fund

solutions

Supporting your

business

Driving the

adviser market

Standard Life Assurance Limited is authorised by the Prudential Regulation Authority in the UK and is regulated by the Central Bank of Ireland for conduct of business rules. Standard Life Assurance Limited is registered in Dublin, Ireland (905495) at 90 St Stephen’s Green, Dublin 2 and Edinburgh, Scotland (SC286833) at Standard Life House, 30 Lothian Road, Edinburgh EH1 2DH.

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