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  • 27.11.2014 Pavillon Cambon, Paris

    For Professional Investors only

    Emerging Markets Flexible Management Alexandre Narboni

  • MAGELLAN Performance* (net, in EUR)

    Cumulative performance since inception (%)

    Rolling performance (%)

    *Net performance in EUR as of 31/10/2014

    Source: FactSet/Comgest. *Past performance is no guarantee of future results. Indices are used for comparison of past performance only. Performance calculation based on NAV to NAV variation expressed in euros. Fund volatility is calculated using

    weekly performance data. The index used for comparative purposes changed from MSCI Emerging Markets price to MSCI Emerging Markets dividends reinvested from 01/01/2006. Comgest S.A. assumed full management of the fund on 31/12/1994 and

    'performance since inception' is as of this date. 2014 Morningstar, Inc. All rights reserved. Ratings and awards mentioned in this document can change at any time and do not constitute a buy recommendation.

    QTD YTD 1 Year 3 Years

    annualised

    5 Years

    annualised

    10 Years

    annualised

    Inception

    annualised

    Portfolio 5.59 17.77 17.21 10.06 9.15 11.64 9.06

    Index 2.01 13.98 9.21 6.99 8.11 10.38 4.72

    2

    Dec

    1994

    Dec

    1999

    Dec

    2004

    Dec

    2009

    100

    200

    300

    400

    500

    % change

    Fund MSCI EM - NR

  • MAGELLAN VS. MSCI EM: HISTORICAL DRAWDOWNS

    Magellan & MSCI Emerging Markets: worst drawdowns (1994 2013)

    -33%

    -60% -58%

    -66%

    -38%

    -24%

    -61%

    -42%

    -49%

    -25%

    -70%

    -60%

    -50%

    -40%

    -30%

    -20%

    -10%

    0%

    1995 1998 2001 2008 2011

    MSCI EM

    Magellan

    09/03/1995 10/09/1998 21/09/2001 27/10/2008 04/10/2011

    Comgests quality growth expertise in the emerging markets

    with reduced volatility and drawdowns Source: Comgest / Bloomberg, Data is EUR

    Simulated performances are not a reliable indicator of present or future performance. Indices are used for illustrative purposes only.

    Trough of

    the MSCI EM

    3

  • OUR APPROACH TO FLEXIBLE MANAGEMENT

    What do other flexible funds typically do? Why we are different

    Use of alternative asset classes: bonds,

    precious metals, short-selling

    Use of options to hedge downside risk

    Discretionary and therefore

    opaque risk-on / risk-off strategy

    Our expertise:

    invest in quality growth companies

    Options are expensive when we need them!

    Our research on companies must be

    the least affected by short-term noise

    4

  • COMGESTS GEM FLEX CONCEPT

    A flexible

    emerging markets

    equity fund

    Systemic equity market risk

    hedging, using solely

    equity index futures

    Net exposure to equity

    after hedging: 20% to

    100%

    Strict focus on

    quality growth

    companies

    Systematic hedging level

    strategy, indexed on

    emerging markets volatility

    5

  • EM Equity market

    FX

    Alpha

    RISK DIVERSIFICATION DOES NOT ALWAYS MEAN RISK REDUCTION

    HEDGING Balanced Funds

    Diversification to other risks

    Comgest GEM Flex

    Dynamic equity exposure

    Active management

    of EM equity risk

    3 sources of risk EM

    Equity market

    FX

    Alpha

    Equities Cash / Cash equivalents

    Precious metals /

    Commodities

    Bonds

    6

  • EMERGING MARKETS: BONDS DO NOT ALWAYS HEDGE EQUITIES

    2013 Emerging Markets Equities vs. EM Sovereign Bonds

    Source: Bloomberg, 02/10/2013

    Past performance is no guarantee of future results. Indices are used for comparison of past performance only.

    80

    85

    90

    95

    100

    105

    Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13

    Bloomberg Emerging Sovereign Bond Index (USD) MSCI Emerging Markets (USD)

    7

  • Hedging approach

  • THE BIG PICTURE

    Step 1 Statistical calculation of the proxy based

    on portfolio of stocks

    Step 2 Systematic calculation of hedging level based

    on market volatility

    Two steps run

    on a daily basis

    EQUITY

    PORTFOLIO

    ACTUAL HEDGE

    NET PORTFOLIO

    50%

    0

    PROXY

    =

    HEDGING

    PORTFOLIO

    EMERGING MARKETS

    QUALITY GROWTH

    PORTFOLIO

    BASKET OF INDICES MOST

    CORRELATED TO THE

    EQUITY PORTFOLIO

    NET EQUITY

    EXPOSURE:

    20% TO 100% OF NAV CASH

    PORTION OF PROXY

    ACTUALLY SOLD

    WITH FUTURES

    100%

    9

  • Euro Stoxx 1%

    Kospi (Korea) 2%

    Top 40 (South Africa) 3%

    FTSE (UK) 3%

    MexDer (Mexico)

    9%

    Nifty (India) 10%

    S&P 500 11%

    MSCI Taiwan 12%

    Hang Seng 19%

    MSCI Emerging Markets

    30%

    PROXY COMPOSITION: Comgest Growth Emerging Markets Flex

    Daily rebalancing based on the portfolio holdings correlations with indices

    Majority of emerging market indices Date: 31/10/2014

    Source: Comgest

    10

  • CALCULATING THE HEDGING LEVEL

    Equity Exposure* in % of NAV

    *Net of hedge and cash equity exposure.

    Source: Comgest

    0%

    20%

    40%

    60%

    80%

    100%

    0 5 10 15 20 25 30 35 40

    VEM proprietary indicator

    11

  • HEDGING LEVEL INDEXED TO VOLATILITY

    Traditional Emerging

    Market volatility index

    Standard deviation of past

    MSCI Emerging Markets returns Average absolute returns

    Traditional volatility is typically too slow to respond to change

    Proprietary EM dynamic

    volatility indicator (VEM)

    Weighted average of

    absolute variations

    More weight on

    recent observations

    More weight on

    negative returns

    The solution:

    12

  • ESTIMATING EMERGING MARKETS VOLATILITY Proprietary Estimate: as reactive as VIX but less noisy

    800

    850

    900

    950

    1000

    1050

    1100

    5

    10

    15

    20

    25

    30

    35

    40

    45

    Historical EM Volatility Proprietary EM Volatility MSCI Emerging Markets

    The proprietary EM volatility indicator

    is expected to be more reactive to market stress Data between 01/01/2013 and 30/09/2013

    Source: Comgest

    13

  • 0%

    10%

    20%

    30%

    40%

    50%

    60%

    70%

    Ju

    l-1

    2

    Au

    g-1

    2

    Se

    p-1

    2

    Oct-

    12

    No

    v-1

    2

    De

    c-1

    2

    Ja

    n-1

    3

    Feb

    -13

    Ma

    r-1

    3

    Ap

    r-1

    3

    Ma

    y-1

    3

    Ju

    n-1

    3

    Ju

    l-1

    3

    Au

    g-1

    3

    Se

    p-1

    3

    Oct-

    13

    No

    v-1

    3

    De

    c-1

    3

    Ja

    n-1

    4

    Feb

    -14

    Ma

    r-1

    4

    Ap

    r-1

    4

    Ma

    y-1

    4

    Ju

    n-1

    4

    Ju

    l-1

    4

    Au

    g-1

    4

    Se

    p-1

    4

    Oct-

    14

    Average

    25%

    HEDGING LEVEL SINCE LAUNCH Comgest Growth Emerging Markets Flex

    Source: Quantam

    14

  • COMGEST GROWTH EMERGING MARKETS FLEX Performance since inception in EUR*

    CGEM FLEX

    EUR I Acc

    MSCI EM net 60%

    +CASH (EUR) 40%

    Annualised Performance 8.5 3.4

    Annualised Volatility 11.7 8.4

    Since inception

    (11/07/2012, in %) MSCI EM - NR

    5.3

    13.9

    Magellan C

    9.9

    13.4

    Outperformance

    86% of Magellans performance captured in bull market

    Annualised volatility reduced by 12.7% compared to Magellan

    *Net performance data as at 31/10/2014. Past performance is no guarantee of future results. Indices are used for comparison of past performance only. Volatility is calculated using weekly performance data. Source : Factset / Comgest.

    Magellan outperformance

    (stock picking)

    Moderate average

    hedging level

    EM currencies vs. EUR

    15

  • SOLID PROTECTION DURING THE LAST MARKET CORRECTION

    16

    10

    20

    30

    40

    50

    60

    70

    80

    90

    95

    97

    99

    101

    103

    105

    107

    109

    111

    1-Aug 9-Aug 17-Aug 25-Aug 2-Sep 10-Sep 18-Sep 26-Sep 4-Oct 12-Oct 20-Oct

    CGEM Flex I (left scale) MSCI Emerging Markets (left scale) Hedging Level (Right scale)

    Net performance data as at 22/10/2014. Past performance is no guarantee of future results. Indices are used for comparison of past performance only. Source : Factset / Comgest.

    -5.3%

    -10.3%

  • COMGEST GROWTH EM FLEX CHARACTERISTICS

    UCITS IV compliant fund launched on 11/07/2012

    AUM as at 31/10/2014: EUR 94.5m

    Benchmark: 60% MSCI Emerging Markets NR (Eur) + 40% Cash (EUR)

    2 available share classes:

    EUR I Acc Class

    EUR R Acc Class

    17

  • CONCLUSION

    Investing in quality growth companies within the emerging market universe...

    An experienced and diverse investment team

    20-year track record, 9.1% compound annual performance*

    A portfolio with equity holdings in-line with our flagship Global Emerging Markets funds

    ... while reducing volatility

    Systematic, tran

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