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Compass Asset Management SA “High Yield: in between Bonds and Equities” Speaker: Corrado Capacci

Compass Asset Management SA “High Yield: in between Bonds and Equities” Speaker: Corrado Capacci. Via Calprino 18, 6900 Lugano - Paradiso Tel. +41 091 960 39 70 - Fax +41 091 960 39 89 www.compass-am.com.

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Compass Asset Management SA “High Yield: in between Bonds and Equities” Speaker: Corrado Capacci

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  1. Compass Asset Management SA “High Yield: in between Bonds and Equities” Speaker: Corrado Capacci Via Calprino 18, 6900 Lugano - Paradiso Tel. +41 091 960 39 70 - Fax +41 091 960 39 89 www.compass-am.com

  2. 2003 - Becomes Investment Advisor to CompAM Fund Sicav, Ucits III domiciled in Luxembourg. 1998 - Compass AM begins by managing assets for private clients through discretionary management mandates Evoluzione Forza Lavoro Compass Asset Management 2012 - Compass AM moved to its new offices at Via Calprino 18 Lugano - Paradiso 2007 - Authorized by the Swiss Federal Banking Commission (now called FINMA) to manage and distribute foreign funds under the Collective Investment Schemes Act Via Calprino 18, 6900 Lugano - Paradiso Tel. +41 091 960 39 70 - Fax +41 091 960 39 89 www.compass-am.com

  3. When more than 20 years ago we were studying finance we were taught a theoretical framework that has its foundation on the RISK FREE INTEREST RATE Via Calprino 18, 6900 Lugano - Paradiso Tel. +41 091 960 39 70 - Fax +41 091 960 39 89 www.compass-am.com

  4. Then 2008 came along and we learn that: THERE IS NO RISK FREE Via Calprino 18, 6900 Lugano - Paradiso Tel. +41 091 960 39 70 - Fax +41 091 960 39 89 www.compass-am.com

  5. The policy response to 2008 led to another consequence: THERE IS NO INTEREST RATE Via Calprino 18, 6900 Lugano - Paradiso Tel. +41 091 960 39 70 - Fax +41 091 960 39 89 www.compass-am.com

  6. Welcome to the era of: - Risk Free Yield Via Calprino 18, 6900 Lugano - Paradiso Tel. +41 091 960 39 70 - Fax +41 091 960 39 89 www.compass-am.com

  7. High Yield: returns in perspective Via Calprino 18, 6900 Lugano - Paradiso Tel. +41 091 960 39 70 - Fax +41 091 960 39 89 www.compass-am.com

  8. High Yield: yields in perspective Via Calprino 18, 6900 Lugano - Paradiso Tel. +41 091 960 39 70 - Fax +41 091 960 39 89 www.compass-am.com

  9. Equity like returns • Lower volatility • Faster recovery of drawdowns because: • Bond mature at par • Do not have to wait for someone to pay your purchase multiple • Cannot disregard earnings generation • Recent fund flows High Yield: historical perspective Via Calprino 18, 6900 Lugano - Paradiso Tel. +41 091 960 39 70 - Fax +41 091 960 39 89 www.compass-am.com

  10. Monetary base expansion fighting deflationary deleveraging • No bankrupcies is allowed in Europe (France-Peugeot, banking sector) • Financial repression way out of government debt issue • Low (zero) rates sustaining longest duration assets (commodities – gold, equities) and money flows to EM • Some segments of financial markets are racing ahead of sensible valuations Current Themes Via Calprino 18, 6900 Lugano - Paradiso Tel. +41 091 960 39 70 - Fax +41 091 960 39 89 www.compass-am.com

  11. SCANIA (A-) 1.625% 2017 issued in September 2012 • NUMERICABLE (B) issuing bonds in the middle of merger talks • LANXSESS (BBB) 2.625% 2022 issued early November 2012 • BOLIVIA (BB-) 4.875% 2022 issued end October 2012 • URUGUAY (BBB-) 4.125% 2045 issued early November 2012 Recent issues we have trouble understanding Via Calprino 18, 6900 Lugano - Paradiso Tel. +41 091 960 39 70 - Fax +41 091 960 39 89 www.compass-am.com

  12. Investment Process - Example • Wind SpA projections and equity valuation Wind SpA Capital Structure FY2012E 5.4x 4.7x 4.2x 3.0x Wind SpA Bond vs Equity Peers Market performance

  13. High cash balance • Using govt credit (Italy, Ireland, France) • Opportunistic on primary • Some high conviction ideas with still interesting yields • Selectively seeking shelter in CHF bonds Current Portfolio Positioning Via Calprino 18, 6900 Lugano - Paradiso Tel. +41 091 960 39 70 - Fax +41 091 960 39 89 www.compass-am.com

  14. CompAM Fund Sicav - Funds Via Calprino 18, 6900 Lugano - Paradiso Tel. +41 091 960 39 70 - Fax +41 091 960 39 89 www.compass-am.com

  15. Awards Via Calprino 18, 6900 Lugano - Paradiso Tel. +41 091 960 39 70 - Fax +41 091 960 39 89 www.compass-am.com

  16. Compass AM - Contacts www.compass-am.com info@compass-am.com Via Calprino 18, 6900 Lugano - Paradiso Tel. +41 091 960 39 70 Fax +41 091 960 39 79

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