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BANK DEGROOF Presentation for VIVIUM Assurances Bruxelles Kinepolis 14 th October 2010. Mr. Thomas-Karl Palmblad 14th October 2010. Agenda. Introduction of Bank Degroof Introduction to Degroof’s Global Investment approach for VIVIUM Introduction of Bank Degroof’s Behavioral Value strategy

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BANK DEGROOF Presentation for VIVIUM Assurances Bruxelles Kinepolis 14 th October 2010

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Bank degroof presentation for vivium assurances bruxelles kinepolis 14 th october 2010

BANK DEGROOFPresentation for VIVIUM Assurances Bruxelles Kinepolis14th October 2010

Mr. Thomas-Karl Palmblad

14th October 2010


Agenda

Agenda

  • Introduction of Bank Degroof

  • Introduction to Degroof’s Global Investment approach for VIVIUM

  • Introduction of Bank Degroof’s Behavioral Value strategy

  • Q & A


Bank degroof presentation for vivium assurances bruxelles kinepolis 14 th october 2010

Independent merchant Bank, founded in 1871, owned by its management

24.1 bn EUR in assets under management

Asset management produces 80% of income

Headcount 1000

Offices in Belgium (HQ), Luxembourg, Switzerland, France, Spain and Bahamas

Bank Degroof


Management and staff have a stake in the group s success

MANAGEMENT AND STAFF HAVE A STAKE IN THE GROUP’S SUCCESS

1.Senior management owns a majority stake in the bank. This gives them, in a long-term approach, a vital interest in the bank's performance and reputation

Management & staff include(1) controlling stake held by Guimard Finance and the Philippson, Siaens, Schockert, Haegelsteen and Fontaine families, (2) active partners and (3) other members of management and staff

2.Financial partners includeCompagnie du Bois Sauvage, Parmafin (Theo Maes family), Luc Waucquez family, Levimmo and others. Own shares represent 1.19 %

Managementand staff

63.85%

Financialpartners and others

36.15%


Bank degroof s reputation is built on the expertise made available to its clients

BANK DEGROOF’S REPUTATION IS BUILT ON THE EXPERTISE MADE AVAILABLE TO ITS CLIENTS

Private clients

Public and private companies and their shareholders

Institutional clients

  • Bank Degroof Brussel’s Institutional Portfolio Management department, Degroof Fund Managament Company and Degroof Gestion Institutionnelle (DGI) are the Degroof group's competence centres for institutional asset management

  • Management of EUR 15.9 billion in UCIs

  • Management of EUR 2.9 billion of institutional portfolios

    Financial markets

  • Long-established financial market player

  • Advice and sales to institutional clients in equities, bonds, undertakings for collective investment, listed derivatives and treasury management

  • A leading liquidity provider on Euronext Brussels

    UCI administration

Private wealth management

  • Protect and grow

  • Full support at all stages of wealth creation

  • EUR 21.0 billion in assets under management

    Legal and patrimonial structuring

  • Specialists in legal, fiscal and inheritance structuring

    Credits & Structuring

  • Credit facilities as part of overall asset management relationships

Corporate Finance

  • M&A expertise, recognized by various rankings

  • Dominant position in the issue of fairness opinions

  • One of the main financial advisers to the Belgian state and regional governments for privatisations and other major financial operations

  • Active role in private and public placements for private companies and companies listed on Euronext Brussels

    Credits & Structuring

  • Structured and tailor-made credits


Bank degroof presentation for vivium assurances bruxelles kinepolis 14 th october 2010

OUR REPUTATION AND PROFESSIONAL APPROACH ENABLE US TO ATTRACT AND RETAIN HIGHLY COMPETENT PROFESSIONALS

  • Our culture is that of top grade professionals, working together in a climate of mutual trust and respect to produce optimal, lasting solutions for our clients

  • This culture provides a stability stimulating creative innovation

  • We favour a long-term approach, with close attention to financial fundamentals

  • For example, the average length of service of senior staff is 11.2 years


Bank degroof excellent performance thanks to

Bank Degroof = excellent performance thanks to

  • a clear and contrarian investment philosophy,

  • inspired by academic research and, that is translated

  • into disciplined investment processes by Teams

  • through a "fundamental-quantitative” approach

  • and with tight risk control


Bank degroof presentation for vivium assurances bruxelles kinepolis 14 th october 2010

VIVIUM, the switch to Degroof Active Management Styles

Degroof Active Funds

Selection of 4 Management Styles

Global Low

Global Medium

Global High

Equities Europe

Behavioral Value

VIVIUM Managed Funds

4 Compartments

  • Stability Fund

  • Balanced Fund

  • Dynamic Fund

  • Aggressive Fund

Low

Active Risk Level

High


Bank degroof presentation for vivium assurances bruxelles kinepolis 14 th october 2010

VIVIUM, the switch to Degroof Active Managed Investment Processes

12 months return as at

30th September 2010

Return 1 Year : + 6.61%

Return 1 Year : + 8.51%

Return 1 Year : + 9.89%

Return 1 Year : + 5.31%

VIVIUM Managed Funds

4 Compartments

  • Stability Fund

  • Balanced Fund

  • Dynamic Fund

  • Aggressive Fund

Low: 20%

Equity Level

High: 100%


Bank degroof presentation for vivium assurances bruxelles kinepolis 14 th october 2010

VIVIUM, the switch to Degroof Active Managed Investment Processes

Tracking Error 1.92% Vol. 5.29%

Tracking Error 2.92% Vol. 9.8%

Tracking Error 6.28% Vol. 15.5%

Tracking Error 5% Vol. 19.7%

VIVIUM Managed Funds

4 Compartments

  • Stability Fund

  • Balanced Fund

  • Dynamic Fund

  • Aggressive Fund

Low: 20%

Equity Level

High: 100%


Bank degroof presentation for vivium assurances bruxelles kinepolis 14 th october 2010

ASSET

ALLOCATION

ASSET ALLOC

INTRODUCTION

CONCLUSION

PERFORMANCE

DIVERSIFICATION

  • GLOBAL LOW

  • GLOBAL MEDIUM

  • GLOBAL HIGH

  • 3 RISK PROFILES


Bank degroof presentation for vivium assurances bruxelles kinepolis 14 th october 2010

ASSET

ALLOCATION

INTRODUCTION

CONCLUSION

PERFORMANCE

DIVERSIFICATION

  • MEDIUM = Flagship Management of Banque Degroof, 1.92 billion euros

    reflects the allocation strategy of medium risk

OPTIMIZE THE RETURN

  • OBJECTIVE

1. Allocation between

assets classes

80% OF THE RETURN

2. Diversification within every asset class

20% OF THE RETURN


Bank degroof presentation for vivium assurances bruxelles kinepolis 14 th october 2010

ASSET

ALLOCATION

INTRODUCTION

CONCLUSION

PERFORMANCE

DIVERSIFICATION

Govies / Agencies

Securitized

Corporates

Inflation linked

Offices

Commercial

Residential

Large caps

Small caps

Private Equity

Flex Collar

Hedge Funds

Timber

Currencies

Deposits

Commercial papers


Allocation medium july 2010

ALLOCATION : MEDIUM(July 2010)

ASSET

ALLOCATION

INTRODUCTION

CONCLUSION

PERFORMANCE

DIVERSIFICATION

Low

High


2 benchmark

2. BENCHMARK

ASSET

ALLOCATION

INTRODUCTION

CONCLUSION

PERFORMANCE

DIVERSIFICATION

Low

High


3 allocation tools assets classes

3. ALLOCATION TOOLS (ASSETS CLASSES)

ASSET

ALLOCATION

INTRODUCTION

CONCLUSION

PERFORMANCE

DIVERSIFICATION

INVESTMENT COMMITTEE

Leading indicators

Consummer confidence

Labour market

New orders

Inventories

Profitability

Real estate activity

Credits

  • MACRO-ECONOMY

  • Growth: Europe, USA, Japan, Emerging countries

  • Inflation :

  • Short term interest

  • Long term interest

  • Exchange rates

  • Equity markets valorisations

CPI, PPI

Monetary aggegates

Commodities prices

World trade volume

Labor cost


3 allocation tools assets classes1

3. ALLOCATION TOOLS (ASSETS CLASSES)

ASSET

ALLOCATION

INTRODUCTION

CONCLUSION

PERFORMANCE

DIVERSIFICATION

INVESTMENT COMMITTEE

FIXED INCOME COMMITTEE

  • BONDS ALLOCATION

  • - Duration/Positioning Real interest rate

    • Yield curve

  • - Govies-Inflation linked: Expected inflation

  • Credit: Corporate - govies: Rating/risk

  • Sectors

  • Countries

  • FINANCIAL RATIOS

    - Price/Earnings

    - Earnings revision

    QUANTITATIVE TOOLS

    - Allocation Equity-Bonds: Risk premium

    - Allocation Blue-Small: Relative P/E


    4 strategy a global allocation

    ASSET

    ALLOCATION

    INTRODUCTION

    CONCLUSION

    PERFORMANCE

    DIVERSIFICATION

    4. STRATEGY A. GLOBAL ALLOCATION

    • Slightly overweighted in equity

    • Underweighted in real estate

    • Lower bonds duration


    Bank degroof presentation for vivium assurances bruxelles kinepolis 14 th october 2010

    ASSET

    ALLOCATION

    INTRODUCTION

    CONCLUSION

    PERFORMANCE

    DIVERSIFICATION

    4. STRATEGY B. EQUITY ALLOCATION

    • Underweighted in Japan


    Bank degroof presentation for vivium assurances bruxelles kinepolis 14 th october 2010

    ASSET

    ALLOCATION

    INTRODUCTION

    CONCLUSION

    PERFORMANCE

    DIVERSIFICATION

    4. STRATEGY C. BOND ALLOCATION

    • Overweightedin corporate & securitized bonds


    5 asset allocation conclusions

    ASSET

    ALLOCATION

    INTRODUCTION

    CONCLUSION

    PERFORMANCE

    DIVERSIFICATION

    5. ASSET ALLOCATION: CONCLUSIONS

    Based on long term views


    Bank degroof presentation for vivium assurances bruxelles kinepolis 14 th october 2010

    ASSET

    ALLOCATION

    INTRODUCTION

    CONCLUSION

    PERFORMANCE

    DIVERSIFICATION

    1. NON EQUITY CLASSES

    2. EQUITY CLASSES

    • BONDS

    • FLEXIBLE COLLAR

    • CONVERTIBLE BONDS

    • HEDGE FUNDS

    • REAL ESTATE

    • COMMODITIES

    • OTHERS: TIMBER

    • STYLES:

    • INDEXED

    • VALUE

    • GROWTH

    • PRIVATE EQUITY


    Bank degroof presentation for vivium assurances bruxelles kinepolis 14 th october 2010

    ASSET

    ALLOCATION

    INTRODUCTION

    CONCLUSION

    PERFORMANCE

    DIVERSIFICATION

    1. NON EQUITY CLASSES

    MEDIUM

    Cash

    2%

    Bonds 16.5% Govies,

     3.1% Inflation linked

     2.4% Corporates

    3.7% Securitized


    Bank degroof presentation for vivium assurances bruxelles kinepolis 14 th october 2010

    ASSET

    ALLOCATION

    INTRODUCTION

    CONCLUSION

    PERFORMANCE

    DIVERSIFICATION

    2. EQUITY CLASSES

    MEDIUM


    Bank degroof presentation for vivium assurances bruxelles kinepolis 14 th october 2010

    ASSET

    ALLOCATION

    INTRODUCTION

    CONCLUSION

    PERFORMANCE

    DIVERSIFICATION

    DIVERSIFICATION: CONCLUSIONS

    Based on convictions, on medium term views


    Risk control

    ASSET

    ALLOCATION

    INTRODUCTION

    CONCLUSION

    DIVERSIFICATION

    PERFORMANCE

    RISK CONTROL

    1

    MEDIUM

    Risk

    Control


    Bank degroof presentation for vivium assurances bruxelles kinepolis 14 th october 2010

    ASSET

    ALLOCATION

    INTRODUCTION

    CONCLUSION

    DIVERSIFICATION

    PERFORMANCE

    OPTIMISTIC SCENARIO

    PESSIMISTIC SCENARIO

    +25.5%

    -10.1%

    +36.5%

    UPSIDE HIGHER THAN DOWNSIDE


    Bank degroof presentation for vivium assurances bruxelles kinepolis 14 th october 2010

    Bank Degroof’s

    Behavioral Value strategy


    Introduction to bank degroof s behavioral value strategy

    Introduction to Bank Degroof’s Behavioral Value strategy

    • Unfortunately …

    Cumulative value of British shares between 1955 and 2001

    You are here

    Source: “Capturing the Value Premium in the UK; 1955-2001” Dimson, Nagel & Quigley, LSE, January 2003


    Introduction to bank degroof s behavioral value strategy1

    Introduction to Bank Degroof’s Behavioral Value strategy

    • 2. Quality of forecasting is a disaster

    Behavioral Value deals with these flaws through

    • Strong buying and selling discipline

      Obtained through a quantitative approach and improved bybehavioral criteria such as earnings revision momentum

    • Behavioral Value eliminates the analysts’ bias oflong term optimism

      By introducing mean reverting in the valuation model/business plan


    Behavioral value

    Behavioral Value

    The Wheel of Fortune – where Degroof is


    Risk premium

    Risk Premium


    Degroof equities europe behavioral value gips

    Degroof Equities Europe Behavioral Value Gips


    Bank degroof presentation for vivium assurances bruxelles kinepolis 14 th october 2010

    Market snapshot

    Source: Bloomberg 8th October 2010


    Bank degroof presentation for vivium assurances bruxelles kinepolis 14 th october 2010

    Outlook

    • Comparison to previous crises

    Source: Lehman Brothers, Global Strategy Outlook, 7 December 2007


    Bank degroof presentation for vivium assurances bruxelles kinepolis 14 th october 2010

    Outlook

    • Equities

    Performance US equities 12 months after bear market bottom

    Source: Global Financial Data


    Contact details

    Contact details

    Thomas Palmblad,

    Institutional & Corporate Desk

    Rue de l’Industrie 44

    1040 Bruxelles

    E-mail: [email protected]

    Phone: +32 2 287 93 27

    www.degroof.be


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