This presentation will take you through Emperor Asset Management's investment philosophy and track record. It also touches on wealth management with a short explanation of how to calculate your wealth index.
2. Page 2
Background
• Intellectual capital
• FSB License
• 30 years Investment Experience
Vega Capital acquired by Tom De Lange in 2004
Joined forces
Joined forces with GT247 in 2010
• Management Expertise
• IT & Admin Support
• World class platforms
• Extensive marketing arm
• JSE Listing (Purple Capital)
Rebranded
Rebranded to Emperor Asset Management in 2011
• AUM R360 Million
Expansion
Partnered with IJG Securities in 2011
• Premier brokerage house in Namibia
3. Page 3
Our philosophy is that the right investment solution is a marriage of science, skill and discipline, coupled
with a deep and trusting client understanding. Our quantitative strategy creates long term sustainable
wealth, underpinned by a high degree of effective risk management.
Robert Falcon Scott Fund
Investment Philosophy
Proprietary quantitative decision making framework
Real time access to portfolio holdings
Segregated client portfolios
Tailored gearing to meet individual risk return requirements
Stock exclusion capacity to meet specific investor preferences
(e.g. Sharia compliance)
Operationally scaled to meet retail and institutional demands
Robust track record of market leading returns
Benchmark - FTSE / JSE Top 40
4. Page 4
Best & worst performers at 31 December 2013
Client Performance
Smaller clients by NAV Larger clients by NAV
25 036Current NAV
20.20%Return 1 year
111%Gearing
Worst performance
24 556Current NAV
40.80%Return 1year
152%Gearing
Best performance
5 554 573Current NAV
22.60%Return 1 year
104%Gearing
Worst performance
6 157 661Current NAV
35.80%Return 1year
158%Gearing
Best performance
5. Page 5
Fund overview – December 2013
Robert Falcon Scott
Inception 1 October 2004
Number of investors 1539
Benchmark FTSE / JSE Top 40
Average gearing 1.12 times – Since inception (1.48 times last 3 years)
Portfolio turnover Historic = 0.7 times per annum
Redemptions 95% = T + 1 (5% = month end) up to R10M
Management fee 1.2%
Performance fee 20% above the benchmark
Administrator First World Trader trading as GT247.COM
Auditor Group - BDO South Africa Inc. | Fund - PWC
Manager Tom de Lange
FSB license categorisation Category 2 (Category 2A pending) FSB license number - 22588
Fund size R360 million
7. Page 7
The Wealth Index
Source: “The Millionaire Next Door”
Loser, spenderWI < 0.5
SecurityWI = 1.0
LifestyleWI = 1.5
Financial Independence
(but a race against time)
WI = 2.0
Financial Freedom
(Capital preservation, but with risks)
WI = 3.0
True Wealth
(Capital growth, emotional freedom,
no risks)
WI= 4.0
Implications at retirement
8. Page 8
0.0
0.5
1.0
1.5
2.0
2.5
3.0
20 25 30 35 40 45 50 55 60 65
Wealth
Comfort
Security
Different Priorities, different outcomes
Age
Security
Wealth
Comfort
3.5%
Cons
5.5%
Balanced
7.5%
Growth
Real Return &
Fund Type
WealthIndex
Rule of thumb
Add 0.5 every 8 years
13. Page 13
Strategy overview
Investment Strategy
Algorithm-based quantitative strategy
Long-Short Equity
140 most liquid JSE shares utilising CFD’s with maximum 2 times leverage limits
determined by the client’s risk profile.
Momentum shares increase
portfolio returns during mid/late
bull markets
Momentum / Growth ranking
1
50%
Blue chips add portfolio stability
and lower risk levels, increase
consistency of returns
Blue Chips
Strategy
weighting
3
20%
Value shares lower overall risk
levels and outperform during bear
markets or early bull markets
Dividend & Earnings
yield ranking
2
30%
20% of funds used as margin leaving 80% of the funds held in cash generating a 4.26% yield
Cash Underpin4
14. Page 14
Portfolio JSE
Total Return 30.7% 13.4%
Upside Capture 108% 100%
Downside Capture 63% 100%
Outperformance 7/10 years
Equities only (no gearing), management fees included, no market timing
Momentum strategy (Simulated results)
15. Page 15
Portfolio JSE
Total Return 24.9% 13.2%
Upside Capture 88% 100%
Downside Capture 52% 100%
Outperformance 7/10 years
Earnings yield and dividend yield, no gearing, no market timing
Value Strategy (Simulated)
16. Page 16
Portfolio JSE
Total Return 24.3% 13.4%
Upside Capture 92% 100%
Downside Capture 60% 100%
Outperformance 7/10 years
Equities only (no gearing), management fees included, no market timing
Blue Chips strategy (Simulated results)
17. Page 17
Portfolio JSE
Total Return 29.0% 13.4%
Upside Capture 103% 100%
Downside Capture 62% 100%
Outperformance 8/10 years
Combined strategy, no gearing, no market timing
RFS Fund Strategy (Simulated)
18. Page 18
Resultant upside & downside capture vs. benchmark (Dec 2013)
Investment Strategy
Our investment strategy has resulted in
higher upside and lower downside capture,
since inception as shown alongside
Emperor Strategy
(No Gearing)
Strategy: Inclusion of 50% momentum shares
Upside
Capture
101% Stock selection: Liquid Small Cap shares
Market timing: Gearing increased when market
indicates strength
1
2
3
119%Last 12 m 78%
Emperor Strategy
(146% Gearing)
Upside Downside
128%Last 18 m 78%
145%Last 2 yrs 76%
148%Last 3 yrs 87%
142%Last 4 yrs 83%
118%Last 5 yrs 70%
118%Since inception 90%
Strategy: Inclusion of 30% value shares
Inclusion of 20% blue chip shares
Market Timing: Gearing decreased when
market indicates weakness
Universe selection : Top 140 shares
Position Weights : Equalised
1
2
3
4
Downside
Capture
51%
19. Page 19
Portfolio JSE
Total Return 45.7% 13.2%
Upside Capture 152% 100%
Downside Capture 87% 100%
Outperformance 10/10 Years
CFDs (160% variable gearing), with partial market timing
The RFS Fund Strategy (Simulated Results)
20. Page 20
For the 3 year period ending 31 December 2013
Actual RFS Fund performance vs. simulated results
RFS
Actual returns
Emperor Strategy
Simulated
Annualised Returns
1 Year 30.1% 24.1%
2 Years 40.5% 37.1%
3 Years 28.8% 26.8%
Upside Capture
1 Year 119% 82%
2 Years 145% 122%
3 Years 148% 116%
Downside Capture
1 Year 78% 28%
2 Years 76% 36%
3 Years 87% 37%
Average Gearing 150% 150%
We have outperformed the simulated portfolio in all 3 years
Gearing for simulated portfolio normalised to RFS geAaring, all costs & income included
21. Page 21
5 Years after the Global Financial Crisis…
Current Market Assessment
Declining peak sentiment
27. Page 27
Annualized Returns – Our Track Record
30.1% 30.1%
39.0%
40.5%
28.8% 29.4% 28.5%
24.2%
19.2%
19.2%
25.1%
20.7%
13.1% 13.5%
16.4% 15.7%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
YTD Last 12 m Last 18 m Last 2 yrs Last 3 yrs Last 4 yrs Last 5 yrs Since
Inception
Source: Bloomberg *EAM return net of fees - The returns achieved to date are after the deduction of performance and management fees
** Capital return calculation - This represents the returns without the re-investment of dividends
*** Total return calculation - The total return assumes all dividends and distributions are re-invested resulting in higher return numbers
28. Page 28
At December 2013
Fund Performance
0%
100%
200%
300%
400%
500%
600%
Jun-04
Dec-04
Jun-05
Dec-05
Jun-06
Dec-06
Jun-07
Dec-07
Jun-08
Dec-08
Jun-09
Dec-09
Jun-10
Dec-10
Jun-11
Dec-11
Jun-12
Dec-12
Jun-13
Dec-13
Alpha: 0.74%
Beta: 0.94%
284.8
14.74%
13.32%
14.77%
14.83%
17.06%
10.52%
11.89%
0.32% 2.55%
Food And Health
Resources
Consumer
Tmt
Industrial
Services
Financial
Put Options
Platinum
Share % Weight % Move 6m
Coronation Fund Managers 9.58% 27.40%
Top Five Holdings
EOH Holdings 7.07% 51.90%
7.00% 50.10%Naspers
6.31% 9.40%
Aspen Pharmacare Ltd 6.01% 18.30%
Remgro
645.1%
29. Page 29
Our simple offering to our investors
25.9%
return per annum
1
24.2% <95%
risk relative to JSE
(downside capture)
90%
2
10/10
years with positive returns
9/10
3
10/10
years outperformance
of the benchmark
8/10
4
30. Page 30
What we can do for You...
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
20 25 30 35 40 45 50 55 60 65
WealthIndex
Age
Wealthy 23%
Comfortable 17%
Anxious 60%
Security
Lifestyle
Wealth
Emperor
31. Page 31
CIO performance to 31 December 2013
Fund Manager’s Performance
Total Invested in RFS portfolios = R7,709,388 (98%* of total NAV)
Tom de Lange
Andromeda Portfolio - Inception 01/02/09
Current NAV
Return 1 year
Return per annum
Cumulative return
R5,655,361
65.9%
54.8%
757%
Performance
Alpha pm
Beta
Upside capture
Downside capture
Average Gearing
1.69%
1.54
201%
145%
221%
Ratios
* Remaining 2% in Purple Capital shares
32. Block B
The Offices of Hyde Park
Strouthos Place (off 2nd Rd)
Hyde Park, 2196
e info@emperor.co.za
t +27 (0)87 940 6121
w www.emperor.co.za
Thank you
Emperor Asset management is a division of First World Trader, an authorised financial services provider, FSP 22588
Notas do Editor
Unique Characteristics:
Transparency
Building a trusted relationship requires total transparency. At Emperor:
You receive daily transactions reports and monthly performance reviews
Your portfolio holdings are always only one click away
You can track your investment performance from day to day
Our fund managers are always available
Low-cost infrastructure and execution costs
Discipline
Effective risk management
Focus on high liquidity shares
Aligned incentives
Adjust equity exposure (up or down) in response to market conditions
Innovation
Unique Decision Making Framework (Market Timing) focusing on high liquidity shares
Leveraged market access
Segregation of client funds via segregated portfolios
Bespoke
Bespoke investment solutions to meet risk and return requirements via segregated client accounts (not pooled)
Accessibility and management of cash component of investment
Above-market returns
Ability to exclude specific stock (e.g. Sharia compliance)
The overall turn in the portfolio is around 0.7 times per year (comparatively lower than other funds).
With low trading volumes resulting in lower brokerage costs and a lower total expense ratio. (Average of 0.9 trades per month) – [refer to benchmark portfolio since inception Aug 2011
Tom Comments 2013/01/25
Average gearing since inception = 1.12x
Average gearing since Sep 2009 = 1.42x