Veronika Pechlaner, CFA Investment Manager, Global equities June 2012

2. Equity investing today - embracing global change Veronika Pechlaner, CFA Investment Manager, Global equities June 2012 Ashburton | A part of the FirstRand Group

3. Equity investing today – embracing global change Section One Section Two Section Three Our investment approach Current views Implications of global change Ashburton | A part of the FirstRand Group

4. Global connectivity increases correlations 1 2 3 Correlation of weekly returns between major indexes Source: Bofa Merrill Lynch Global Research Note; Daily data from 26-May-95 to 22-May-12 for pairwise correlation between Inverted Dollar Index, S&P GS Commodity Index, MSCI World equity index, BofA Merrill Lynch US High Yield Master II Index

5. “BRICs” remain the world’s growth engine 1 2 3 Consensus estimates for regional GDP growth (%) x3 Source: Ashburton survey of broker forecasts

6. Developed government bonds not risk free 1 2 3 Government debt levels as % of GDP in developed economies Source: Barclays Capital

7. Low yield for low risk the “new normal”? 1 2 3 Nominal 10yr government yields for major developed countries (%) Source: Bloomberg

8. Nominal equity yields close to relative highs 1 2 3 Equity dividend yield premia over 10yr government bonds (%) Source: Bloomberg

9. Are long-term inflation expectations too low? 1 2 3 Longer term US inflation expectations (Breakeven inflation rates) Source: Bloomberg

10. Emerging demand still to rise 1 2 3 Chinese urban population increasingly consumes Commodity price curves not linear P Q Source: Factset, Ashburton

11. Asian low-cost workbench to disappear 1 2 3 Chinese labour force aging Yoy wage inflation to continue Source: CEIC, CRR, CSLA Research

12. Higher inflation a politically acceptable route 1 2 3 Note: Actual and Announced as per 22. May 2012 Source: ECB, Eurostat, Berenberg projections

13. Preservation of capital or purchasing power? 1 2 3 August 13, 1979: Business Week proclaims “The Death of Equities” Source: Merrill Lynch

14. Look for inflation protected yields in equities 1 2 3 +30% Source: Bloomberg

15. Equity investing today – embracing global change Section Two Section One Section Three Implications of global change Our investment approach Current views Ashburton | A part of the FirstRand Group

16. Global equity offering • Actively managed, benchmark unconstrained • Diversified across regions incl. emerging exposure • Philosophy:identify companies well-positioned in attractive industries that benefit from global structural change • Process: consistent theme-led investment process with relative value based stock selection. “Thematic” GARP (growth at reasonable price) underpinned by quality (sustainably growing dividends). • Portfolio construction: combination of (i) medium-term thematic exposure; (ii) global relative investment opportunities • Relative return approach: aim to outperform MSCI World equity benchmark on 3-year rolling basis • Tracking error: 5-10% 1 2 3 3

17. Global equity philosophy 1 2 3 “Even the best management will find it difficult to perform if the macro-environment or industry is presenting disproportionate headwinds to its business.” • Benefit from structural change globally through diversified portfolio of equities in developed & emerging markets • Top-down roadmap driven by global macro- and fundamental industry trends • Bottom-up stock selection aims to exploit mispricing of value and growth opportunities in attractive industries • Approach allows for relative investment opportunities taking into account positioning in the industry, management quality and relative valuation • Acknowledge importance of sustainably growing dividends as component of total return over time

18. Global equity investment process 1 2 3 Top down thematic views Asset Allocation team & External industry experts GARP based bottom up analysis Management contact & External research input Source: Ashburton

19. Global equity strategic roadmap 1 2 3 Energy Innovation Deleveraging Emerging growth Evolving Themes • Technology • Bio sciences Consumer & Lifestyle Commodities Infrastructure & Real estate Financial services • Integrated • E&P • Oil services • Clean & Green Stable Demand Deleveraging consumer Recovering West Fundamental industry trends Macro induced Source: Ashburton

20. In-house analytical tools to assess relative value 1 2 3 • Qualitative profiling: Global industry positioning, management quality • Screening model: Ranks large universe of equities in each global sector according to a number of fundamental criteria • Quality (Profitability/capital efficiency/cash conversion/balance sheet) • Growth (EPS growth) • Value (P/B and earnings yield) • Analyst earnings revisions (EPS change, Up/down revisions) • Cash return (CROCI) framework: In-depth stock analysis complemented by dividend yield and balance sheet considerations • Current valuation upside implied by forward excess cash returns • Sustainable improvement of excess cash returns over time • Technical indicators to refine final investment decisions

21. Portfolio construction 1 2 3 Source: Ashburton

22. Examples 1 2 3 Medium-term theme Apple (Technological innovation) • Rationale: May 2011 • Global leadership with strong mobile product offering with iPhone and iPad • Global rollout plans into China and product launches of iPhone 4S and ipad 3 expected for next 12 months • Risks associated with Steve Job’s health assumed to be widely discounted • Potential for earnings upside paired with reasonable valuation, strong balance sheet and potential for introduction of dividend Source: Factset

23. Examples 1 2 3 Medium-term theme Duerr (Emerging market automation exposure) • Rationale: Nov 2011 • German listed industrial midcap with global business mix • Globally leading supplier of high-tech car paint coating cabines • Exposure to emerging markets and positioned to benefit from increased need for automation given labour inflation • Following growth scare in summer of 2011 stock traded on 7x forward P/E despite outlook for stronger than expected order growth outlook • Strong management backed by family owners Source: Factset

24. Examples Relative investment opportunity: ABI vs. global peers (US exposure at European multiples) 1 2 3 • Rationale: May 2011 • Globally leading brewer with strong brands (Budweiser, Bud Light, Stella Artois, Beck’s), listed in Europe • Market leadership in US and Brazil with c. 70% of business from these two regions (vs. 11% exposure to Western Europe) • Leadership position allows for superior pricing power • Global leader status allows for consolidation opportunities and growing dividend potential • Relative valuation vs. staples in other regions attractive Source: Factset

25. Equity investing today – embracing global change Section Three Section One Section Two Implications of global change Our investment approach Current views Ashburton | A part of the FirstRand Group

26. Global equity strategy views 1 2 3 • Valuations support positive view on global equities medium-term, notwithstanding short-term volatility • Earnings-momentum crucial from here • Riskshave not changed, but focus and timeline evolving • European debt crisis • Chinese growth • US fiscal deficit • Oil price shock

27. Expected returns favour equities & credit 1 2 3 *Assumes equity Earnings Yield is a reasonable representation of expected real return on equity; G4=weighted average of US, Japan, EU, UK; Cash and bond composites averaged by nominal GDP; Corporate yields deflated by 5yr market implied inflation rates (BarCap indices) **EM govt local = GDP weighted average of real yields on 2020-2023 inflation-linked bonds in Brazil, Mexico, Korea, SA, Turkey, Poland, Thailand, Colombia. The EM US$ aggregate includes the same set of countries ex-Thailand. Source: Bloomberg, Barclays Capital, MSCI, Ashburton

28. Valuations in some regions getting attractive 1 2 3 Historic range = 20-year to June 1, 2012 Note: Diamond indicates current value relative to High/Low and Interquartile range Source: Factset, Ashburton

29. Earnings-momentum crucial from here 1 2 3 Consensus EPS growth (LHS) and implied forward PE/Growth ratio (RHS) Source: Factset, Bloomberg, Ashburton

30. Chinese tightening cycle over for now 1 2 3 China relative performance indexed vs. interest rates (%) Source: Bloomberg

31. We favour Emerging over Western exposure 1 2 3 Global equity positioning: Regions Source: MSCI, Ashburton

32. Macro outlook to remain in focus 1 2 3 Emerging growth Evolving Themes Energy Innovation Deleveraging Consumer & Lifestyle Commodities Infrastructure & Real estate Financial services • Technology • Bio sciences Stable Demand Deleveraging consumer Recovering West • Integrated • E&P • Oil services • Clean & Green • Credit market • Austerity programs • US unemployment & housing • US manufacturing “renaissance” • Oil price • Vehicle miles • Nuclear (Japan) • Shale gas • Rig count • Day rates • Loan growth • China property • Macau/HK retail • Swiss watch exports • Shipping data • Tablet demand • Semiconductor cycle Relative value analysis Source: Ashburton

33. Appendix

34. Portfolio risk management tools • Market risk: Active management of cash levels and ability to use futures to reduce equity exposure to below 80% of the portfolio (in extraordinary circumstances) • Active risk to benchmark: Tracking error of 5-10% for relative equity mandates reflecting top-down thematic approach • Drawdown risk: Close monitoring of (relative) stop loss situations (15% absolute loss and/or relative underperformance vs. benchmark) • Liquidity risk: Minimum liquidity requirement with positions not to exceed a third of their average daily trading volumes • Monthly fund review meetings: Review by MD and CIO of risk adjusted performance, active positioning, drawdown situations & liquidity risk