september 30, 2019...2019/09/30 · the digital twin market is expected to grow at a cagr of...

September 30, 2019

Prosperously navigating

unexpected events

with great skill and agility

2

AGENDA

Who We Are

Investment Methodology

Performance by sectors

Risk Management

Current Opportunity and Investment pipeline

Performance

Summary

3

DISCLAIMER: The information and opinions expressed herein are current as of this document date and Black Swan Dexteritas Inc. assumes no obligation to provide updates or

advise on further developments. Any reference should not be considered as investment advice or a recommendation to buy or sell nor should it be considered as any indication of the

portfolio of any Black Swan Dexteritas investment fund or how it will be invested. Commissions, trailing commissions, management fees and expenses may all be associated with fund

investments. Please read the prospectus before investing.

Investment funds are not guaranteed, their values change frequently and past performance may not be repeated.

WHO WE ARE

4

BLACK SWAN

DEXTERITAS

(“BSD”)

TECHNOLOGY EXPERTISE

• Unique insight

from entrepreneurs leading

international tech development

based on needs creation

• Advisory Committee of tech leaders

who determine the global adoption

and success of new technologies

• Representation in all BSD-invested

tech sectors and sub-sectors, for

unrivalled expertise

• Portfolio Manager with 30 years of

portfolio management experience

across various asset classes at

asset management companies (LGT,

TAL, CIBC Asset Management), and

a pension (British Petroleum)

• Exceptional research team with a

wide breadth of knowledge in

research, finance, and engineering

• Intense due diligence process for our

stock selection process

• Unique risk management overlay

to minimize drawdowns and volatility

PORTFOLIO MANAGEMENT

EXPERIENCE

5

INVESTMENT METHODOLOGY

SECTOR ASSESSMENT

• Life Cycle: Sectors in introduction and growth stages with

high Total Addressable Market (TAM)

• Competition: High barrier of entry with differentiated products

and services within the sector

COMPANY ANALYSIS

• Business Model: Public ccompanies with high recurring revenue,

easily able to leverage network effects, strong negotiating power

with suppliers and customers, and strong corporate governance

• Size: Target small (500M+) to large cap public companies with

established track record of executing the business.

• Growth: Public companies with high and/or consistent revenue

growth

• Valuation: Determine if opportunities exist based on our fair

value expectation of stocks versus current stock prices

PORTFOLIO CONSTRUCTION

• Weightings: Determine % of portfolio allocated to holdings

based on risk-reward expectations

• Diversification: Well-diversified across 35 to 40 holdings to

maximize risk-adjusted returns

• Hedging: Utilize derivatives and fixed income products to

minimize drawdowns and generate alpha

IDEATION

• BSD Investment Advisory Committee: seek out global

growth themes and trends to overweight and underweight

various subsectors

• Experienced investment team sourcing trade ideas and

discussing vital macro economical forces in play

• Draw on sector experiences from members of the committee and

discuss emerging technology from the private and public space

• Deep dive into industry verticals to identify beneficiaries in other

primary, secondary, and tertiary markets

PORTFOLIO CONSTRUCTION

IDEATION

SECTOR

ASSESSMENT

COMPANYANALYSIS

PUBLIC COMPANIES

TOP 10 STRATEGIC TECH TRENDS FOR 2019-2020

6

7

IPHONE 8 ECOSYSTEM

INVESTMENT METHODOLOGY IDEATION EXAMPLES

Assembly

CPU (Central Processing Unit)

GPU (Graphics

Processing Unit)

Baseband Processor (Cellular modem)

Radio frequency (RF)

Power management

Power Delivery

Wireless charging

Display

Flash Memory

MEMS and other sensors

8


SAE automated driving levels

End Users

ApplicationsHardware

Statistics and Forecasts

AUTOMATED DRIVING ECOSYSTEM

9


DIGITAL TWINS ECOSYSTEM

Hardware

• Sensing & Power

• Processing

Software

• Data management

• CAD - Computer-Aided Design

End users

INVESTMENT METHODOLOGY DIVERSIFICATION

BSD seeks out high potential technology sectors with promising unit sales projections and revenue

projections and minimizes exposure to low potential sectors

PORTFOLIO BY MARKET CAP PORTFOLIO BY TECH SUBSECTOR

$5B to $10B

5.0%

Over $10B

91.0%

As of September 30, 2019

BSD is well-diversified across 10 technology subsectors

across 30 to 35 holdings with minimal correlation.

Under $5B

4.0%

10

1.99%

3.63%

3.69%

3.95%

4.05%

7.13%

8.90%

13.42%

13.79%

Consumer Electronics

Technology Real Estate

Automation

Cyber Security

Consumer Services

Fintech

Communication Equipment

Semiconductors

Internet Software

HEDGING OVERLAY

HEDGING STRATEGY

The goal of the hedging strategy is threefold:

1. Minimize the portfolio’s drawdown

2. Lessen the portfolio’s volatility

3. Generate alpha

HEDGING TACTICAL PROCESS

There are 3 tactical steps in the execution of the hedging process:

1. The neutral market position is set at 20% of the stock portfolio, ex-cash

2. The hedging position will deviate from the neutral market position to underweight or

overweight, based on macro fundamental, technical, and capital flow factors

3. The combination of various futures instruments ( for example, S&P 500 futures,

Nasdaq 100 futures, and Russell 2000 futures) is determined by a proprietary

hedging model

HEDGING P&L IMPACT

The hedging strategy is an “insurance” policy in anticipation of an adverse market event

The hedging tactical process limits drawdowns, and potentially generates alpha

RISK MANAGEMENT

11

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BSD S&P 500 Benchmark

CASE STUDY: FEBRUARY- MARCH 2018 CORRECTION

RISK MANAGEMENT

12

At the peak of the drawdown, BSD exhibited

less drawdown than the Nasdaq/Russell

benchmark as well as the S&P 500 Index.

Once the fear subsided and the market has returned to

its pre-correction levels, BSD outperformed the

Nasdaq/Russell benchmark as well as the S&P 500

Index.

CASE STUDY

Our dynamic hedging strategy allows us to position our portfolio to minimize losses during market downturns

and maximize upside potential in recoveries

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BSD Global Tech S&P 500 Russell 2000 NASDAQ

Conversely, when we see certain signs of market

deterioration, we increase our hedging positions.

RISK MANAGEMENT

Our prudent risk management system allows us to navigate market corrections

and black swan events with lower drawdowns and higher returns

13

CASE STUDY: MAY2019 CORRECTION

BSD scales back our hedging positions accordingly as various market signals indicated probable upside to our portfolio

CASE STUDY

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BSD ^GSPC ^RUT ^IXIC


Our dynamic hedging strategy allows us to position our portfolio to minimize losses during market downturns

and maximize upside potential in recoveries

As market conditions deteriorate, our hedging

positions reduce our total portfolio drawdown,

allowing us to outperform our benchmark.

RISK MANAGEMENT

14

CASE STUDY

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BSD Global Tech S&P 500 Russell 2000 NASDAQ

At the peak of the drawdown, BSD exhibited less drawdown

than the Nasdaq and Russell, as well as the S&P 500 Index.

Once the market has returned to its pre-correction

levels, BSD outperformed the Nasdaq and Russell,

as well as the S&P 500 Index.

RISK MANAGEMENT

Our prudent risk management system allows us to navigate market corrections

and black swan events with lower drawdowns and higher returns

15


CASE STUDY

CURRENT OPPORTUNITIES AND INVESTMENT PIPLINE

• DIGITALIZATION & ELECTRIFICATION

The automotive revenue pool will grow and diversify with new services potentially becoming a ~USD 1.5

trillion market in 2030

• 5G DEPLOYMENT

The 5G market will grow to $1.23 trillion by 2026, according to a new report by Ericsson announced at the

Mobile World Congress

• DIGITAL TWINS

The digital twin market is expected to grow at a CAGR of 37.87%, to reach USD 15.66 Billion by 2023

• BIG DATA

Worldwide Big Data market revenues for software and services are projected to increase from $42B in

2018 to $103B in 2027, attaining a CAGR of 10.48%.

• AUTOMATION & ROBOTIZATION

After growing at a compound rate of 17 per cent a year, the robot market will be worth $135bn by 2019,

according to IDC

• OLED – Organic Light Emitting Diode

The OLED market is expected to be valued at USD 48.81 Billion by 2023, growing at a CAGR of

15.2% between 2017 and 2023

• GAMING

Gaming market to grow at a CAGR of +11% toward 2021 to reach $180.1 billion

Source: Statista, Gartner, Ericson, Newzoo

16


DIGITALIZATION & ELECTRIFICATION

17

Entire industries are changing with and through digitalization, while car drivers are demanding even

more from their vehicles. In addition to vehicle dynamics and consumption, the perceived intelligence,

comfort, and convenience of the car also play a significant role.

We are convinced that electromobility in its many different forms will be an essential component of

future mobility.

The automotive revenue pool will grow and diversify with new services potentially becoming a ~USD

1.5 trillion market in 2030.


5G

18

5G networks are the next generation of mobile internet connectivity, offering faster speeds and more

reliable connections on smartphones and other devices than ever before.

The 5G market will grow to $1.23 trillion by 2026, according to a new report by Ericsson announced at

the Mobile World Congress

Verizon CEO: 5G is a lot closer than people think.


DIGITAL TWINS

19

A digital twin is a virtual representation of a physical object or system across its lifecycle, using real-

time data to enable understanding, learning and reasoning.

Digital twins integrate artificial intelligence, machine learning and software analytics with data to create

living digital simulation models that update and change as their physical counterparts change.

The digital twin market is expected to grow at a CAGR of 37.87%, to reach USD 15.66 Billion by 2023.


BIG DATA

20

Data Analytics is the process of examining data sets in order to draw conclusions about the

information they contain, increasingly with the aid of specialized systems and software.

Worldwide Big Data market revenues for software and services are projected to increase from $42B in

2018 to $103B in 2027, attaining a CAGR of 10.48%.

Big Data applications and analytics is projected to grow from $5.3B in 2018 to $19.4B in 2026,

attaining a CAGR of 15.49%.


AUTOMATION & ROBOTIZATION

21

The term robotic automation or robotization refer to the automation of industrial and business

processes using robots, of various guises.

Manufacturing is undergoing its greatest transformation since the Industrial Revolution. A wave of

intelligent technologies is shaping a more connected, flexible and efficient factory floor—and redefining

the ecosystem of equipment providers in the process.

After growing at a compound rate of 17 per cent a year, the robot market will be worth $135bn by

2019, according to IDC


OLED – Organic Light Emitting Diode

22

Organic light emitting diodes don’t need a backlight, so can be manufactured into thinner, more flexible

displays than LCDs.

The demand from foldable devices, as well as the demand from Apple and Samsung for the displays

on their next generation phones, will make OLED one of the fastest growing markets in the global tech

hardware sector.

The OLED market is expected to be valued at USD 48.81 Billion by 2023, growing at a CAGR of

15.2% between 2017 and 2023


GAMING

23

Modern personal computers owe many advancements and innovations to the game industry: sound

cards, graphics cards and 3D graphic accelerators, faster CPUs, and dedicated co-processors like

PhysX are a few of the more notable improvements.

As of 2017, games industry generated $108.4bn in revenues worldwide, and were the third-largest

segment in the U.S. entertainment market, behind broadcast and cable TV.

Gaming market to grow at a CAGR of +6.2% toward 2020 to reach $128.5 billion

PERFORMANCE

PERFORMANCE METRICS* FUND RETURNS

FUND S&P 500

Return Since Inception

YTD Return

60 Day Return

20 Day Return

Daily Standard Dev.

Sharpe Ratio

Sortino Ratio

Correlation

56.85%

12.36%

0.47%

-0.13%

0.80%

0.58

0.81

-

77.02%

18.74%

-0.46%

1.72%

0.83%

0.73

0.99

0.95

* Management fees and expenses may be associated with investments. Investment funds are not guaranteed, their values change frequently and past performance may not be repeated. The indicated rate of return is the historical compounded total return including changes in share value and reinvestment of all dividends.

October 1, 2013 to August 31, 2019

24

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD S&P 500 YTD

GLOBAL TECH FUND MONTHLY PERFORMANCE SINCE INCEPTION

BSD has outperformed our portfolio benchmark with lower risks through active diversification across various subsectors

2013 1.32% 0.35% 2.82% 4.55% 9.60%

2014 -2.08% 3.63% -2.07% -4.39% 2.38% 2.80% 2.21% 3.53% -1.64% 4.95% 2.89% -1.51% 10.69% 11.43%

2015 0.53% 5.39% -0.16% 2.98% 0.90% -0.91% 0.43% -6.67% -1.48% 9.68% 0.63% -0.76% 10.16% 0.47%

2016 7.41% -2.78% 5.31% -0.02% 2.33% -0.29% 3.66% 0.65% 1.63% 0.38% -3.75% -0.71% -1.63% 9.50%

2017 4.97% 2.14% 2.99% 2.08% 3.85% -2.55% 2.68% 2.12% 0.51% 3.41% 0.11% -0.20% 24.49% 19.42%

2018 2.89% 0.63% -0.62% -1.57% 4.11% -1.63% 0.63% 1.72% -2.18% -7.87% 2.70% -7.41% -10.01% -6.55%

2019 7.09% 1.55% -0.91% 1.86% 0.44% 0.70% 1.83% -0.27% -0.13% 12.36% 18.74%

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90.00%

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BSD S&P 500

25

HOW BSD COMPARES TO OTHER HEDGE FUNDS

HEDGE FUND STRATEGIES* 2014 RETURN 2015 RETURN 2016 RETURN 2017 RETURN 2018 RETURN

PERFORMANCE

BSD Global Technology Hedge Fund

Absolute Return

Multi-Region

Equal Weighted Strategies

Relative Value Arbitrage

Macro/CTA

Fixed Income - Credit

Global Hedge Fund

Equity Hedge

North America

Emerging Markets Composite

Market Directional

Event Driven

10.69%

0.67%

1.71%

-0.56%

-3.06%

5.09%

-1.86%

-0.60%

1.37%

-4.13%

-8.03%

5.13%

-4.06%

Our outperformance relative to other funds are indicative of our core competency in

generating outsized returns and navigating a challenging market environment

* Hedge fund index data is provided by Hedge Fund Research Index (HFRI) as of January 2018.

10.16%

2.86%

-1.19%

-1.54%

-3.10%

-1.96%

-4.38%

-3.64%

-2.33%

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-8.58%

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-1.63%

0.31%

1.95%

3.78%

1.03%

-2.93%

4.97%

2.50%

5.49%

4.14%

6.77%

9.86%

10.50%

24.99%

3.91%

6.58%

6.10%

4.28%

7.43%

4.55%

8.04%

12.78%

6.25%

8.99%

4.68%

7.22%

-10.02%

-0.49%

-5.90%

-5.35%

-1.17%

-3.25%

-2.55%

-6.72%

-9.42%

-7.62%

-7.55%

-12.54%

-11.68%

26

SUMMARY

• We bring unique, proven strengths

• Principal with 30 years of portfolio management experience

• Dynamic stock selection methodology

• Disciplined risk management process

• Our expertise in technology is unparalleled

• Team consisting of seasoned entrepreneurs that have co-founded billion dollar companies

• Global networks of advisors and analysts examining tech vendors and tech end-users

• Significant out-performance in risk-adjusted returns

• The BSD Global Tech Hedge Fund returned 56.85% since inception versus S&P 500 index

return of 77.02%

• Exhibited only 83% of the benchmark volatility

• Hedging strategy acts as an “insurance policy” in anticipation of adverse market events,

by limiting drawdowns and often generating alpha

* Management fees and expenses may be associated with investments. Investment funds are not guaranteed, their values change frequently and past performance may not be

repeated. The indicated rate of return is the historical compounded total return including changes in share value and reinvestment of all dividends.

september 30, 2019...2019/09/30 · the digital twin market is expected to grow at a cagr of...

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