Miton Optimal presentation

Guernsey | South Africa | United Kingdom | Isle of Man | Singapore
2017GroupMitonOptimal 2017GroupMitonOptimal 2017GroupMitonOptimal 2017GroupMitonOptimal
MitonOptimal Group
“Lets talk about DFM”
2nd November 2017
Senate Conference
Pretoria

2017GroupMitonOptimal 2017GroupMitonOptimal
So where does this start?
The financial services arena is complex!
48 local ManCo’s
1657 CIS funds
Offshore >50 000 funds to choose from!
DFM is not a foreign concept offshore!
Novia – DFM custodian platform
Brooks Macdonald, BlackRock, (Big Names), etc.
https://international-adviser.com/mitonoptimal-on-advisers-using-dfms/

“Discretionary Fund Managers (DFMs) offer a professional investment service
by providing expertise in the selection and monitoring of specifically designed
portfolios and their performance. DFMs will work with you (the IFA) to
understand your book of client’s personal circumstances and investment
needs and will make all the complex investment decisions, based on your
client’s tolerance to risk, return profile needs and time horizon associated to
their investment needs.
Each DFM will have their own “in-house” style when creating portfolios, and
will use financial instruments that they have at their disposal to achieve the
desired asset allocation and expected results.
DFM Clients are mandated!
What is retail & institutional DFM services?

1887 JSE, FAIS, RDR, TCF……
Twin Peaks – new model for financial sector regulatory
framework, the purpose is to “create a prudential regulator”
Prudential Authority (SARB)
Financial Sector Conduct Authority (FSB)
To strengthen South Africa’s approach to consumer
protection and market conduct in financial services, and
to create a more resilient and stable financial system.
4
And what are your challenges?

The FSB?
Is there to “Protect the investing community”; by
Ensuring that financial institutions treat financial
customers fairly;
Enhancing the efficiency and integrity of the
financial system; and
Providing financial customers and potential
financial customers with financial education
programs, and otherwise promoting financial
literacy and financial capability.
5
FSB’s role….

CATII’s – 756 FSB licensed
1657 registered CIS’s
Countless Model Portfolio’s
Glacier International - 30 DFM’s 150 Models
Momentum - 60 DFM’s 510 Models (2 hold 175 models)
Allan Gray - 26 DFM’s 491 Models
Glacier - 75 DFM’s 1900 Models
Investec - 33 DFM’s +500 (Changes daily)
Other - Many Many……
Not all CATII’s are equal
Conflict Management – FIA Sub Investment Committee FSB submission
6
CATII’s & DFM’s lets take a look!

CONFLICT MANAGEMENT
• The CAT 1 (advisor) and CAT 2 (DIM) are separate licenses (Firms?) & separate Key
Individuals
• The CAT 2 is licensed for intermediary services and not advice (CAT 1)
• There is segregation of duty - organisationally and operationally between the CAT
1 and 2
• Use existing additional disclosure requirement if the CAT 2 DIM is part of the same
Group
• The CAT2 DIM does not have any undue influence over the CAT 1 with regards to
production and does not influence the CAT 1s decision process to place clients in
the CAT 2 DIMs solutions, nor in selecting Platforms to support, and certainly not
having targets for the CAT 1

CONFLICT MANAGEMENT (cntd)
– If the CAT2 DIM solutions are Models [Wrap Funds] – then the client still signs a
discretionary mandate with the CAT2 DIM
– If the CAT2 DIM solutions are CIS - then the discretion is a given within the unit trust.
– Models [Wrap funds] should have improved minimum disclosure requirements to
ensure clients receive the maximum information
• Separately, but importantly, the CAT 1 should always be able to demonstrate /
advise / explain why they chose a specific CAT2 DIM solution for their clients
• By extension the CAT2 DIM must be able to at all times demonstrate their process,
skills, and procedures in constructing investment solutions
In this example the CAT 1 should still meet the RFA requirements

• Where the CAT1 and CAT2 DIM are in no way related, then the CAT2 DIM cannot
pay (or share), in any form, the CAT1 for client referrals
• Where the CAT1 and the CAT2 DIM are inter-related, then the CAT1 has to:
o Fully disclose the association, and
o Further the advice and discretionary management fees must be separate items, charged
separately by the respective FSPs, and
o Be implemented without cross subsidy or pay back in any form to the related CAT1
• In all instances, all fees charged for advice and discretionary management, should
be separated per service, and disclosed to the client in full

Why would an IFA choose to partner with a DFM?
1. Independence
2. Business risk management
3. Succession planning purposes – Longevity & Structure
4. In-sourcing of an investment specialist & investment back-office
To assist in achieving their client investment goals consistently over time.
To assist in meeting their regulatory and compliance obligations, e.g. TCF.
To assist in reducing their risk in respect of investment advice, implementation and reporting.
Can provide customized, branded investment reporting and supporting documentation.
Free up their time so that they can focus on other areas of business that are of most benefit
to their business and their clients.

Financial strength and resources – business characteristics
Quality of people
Client on-boarding
Performance
Ease of doing business
Tailoring capabilities
Investment expertise and flexibility
Research capabilities
Fees
11
How to choose a DFM partner?

The big question is what does your client expect?
Advisers should ask themselves
“What am I great at?” and “What do my clients really value?”
The answer to these questions should be and according to global research are: -
“Financial planning, ensuring tax efficiency (tax planning), estate planning and
MOSTLY making sense of it all.”
Although all clients will expect returns on investments, the financial planning aspect is more
important.
FinaMetrica research – shows us that “accessing risk tolerance and risk capacity of your client”
is the most important function an IFA should involve themselves in….!!!
- Risk Profiling Art & Science

Global research - What do clients want?
60% of all Investors.....have no Investment Strategy that will achieve their goals (within
the desired risk capacity) where the risk is consistent with risk tolerance (i.e.
undershoot) ↓
30% of all investors’: required risk, risk capacity & tolerances are more or less in line √
10% of all investors’ required risk to achieve clients goals (with desired risk capacity) is
less than their risk tolerance (i.e. overshoot) ↓

What do clients want? What’s your “Alpha”?
Where Advisors Really Add Value…Unpacking advisor’s ‘Alpha’…
Alpha is not achieved by trying to outperform the market, but by relationship orientated
services…
Being an effective and trusted behavioural coach
Having a tax-efficient allocation
Making use of cost-effective investments
Disciplined rebalancing
Drawdown strategy

What do clients want?
Compelling Experience
Personal Focus
Reciprocal Loyalty
Differentiation
Coordination (simplification)
Innovation (alignment with subject-matter-
experts)
"They don't want you to make it right, they want
you to get it right."
Follow up in writing.
Don’t be afraid to deliver bad news.
Be in constant communication, especially in
volatile times.
Listen to your client.
Keep it simple and relevant.
Warmth
Friendliness
Personal interest
Undivided attention
Responsiveness
Direction and Guidance (making sense of it all….)

In a nutshell clients want….
“ An expert who will create a customized approach to their
unique problems! Someone they can call when they have not
only a financial emergency, but a personal emergency also.
They want to hear from you often, and they want to know that
you care about them. ”
Sources: Forbes/Advisor Network, CFA Institute, ThinkAdvisor, Financial Advisor Marketing, The Trusted Financial Advisor (tm),
FinaMetrica, Nedgroup Investments, Investec

Now my commercial….. Why MitonOptimal as a DFM Partner?
Independence: We are an independent, owner-managed investment business, with a
presence in Channel Islands, South Africa, London, the Isle of Man and Asia. We are platform,
fund and fund manager agnostic.
Track record: We have offered DFM services, both internationally and in South Africa, for over
a decade.
17

Tailored Models - Performance & Volatility Numbers of over 5 Years
Pricing Spread: Bid-Bid • Currency: South African Rand
8.0
7.0
9.0
10.0
11.0
12.0
13.0
15.0
14.0
16.0
17.0
18.0
19.0
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 8.5 9.0 9.5 10.0 10.5 11.0 11.5 12.0 12.5 13.0 13.5
Mean Ann. Performance of 12.78
Mean Ann. Volatility of 6.36
A
B
CD
E
F
G
14.0 14.5 15.0 15.5
31/01/2012 - 31/01/2017 © FE 2017
7.5 8.0
Ann. Volatility
%
Ann.Performance
Key Name Annualise Performance Annualised Volatility
A Tailored DFM CPI + 6 Discretionary Portfolio TR in ZA 16.92 9.66
B Tailored DFM CPI + 5 Discretionary Portfolio TR in ZA 16.04 8.58
C FTSE/JSE All Share TR in ZA 12.67 10.35
D Tailored DFM CPI + 5 Reg 28 Portfolio TR inZA 12.66 6.52
E Tailored DFM CPI + 4 Portfolio TR in ZA 11.85 4.52
F Tailored DFM CPI + 3 Portfolio TR in ZA 10.63 3.18
G Tailored DFM CPI + 2 Portfolio TR in ZA 8.67 1.72
A custom page title has been included.
Data provided by ProfileData and FE. Care has been taken to ensure that the information is correct but the suppliers neither warrant, represent nor guarantee the contents of the information, nor do they accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein.
ProfileData: 26 Eleventh Avenue, Houghton 2041, Johannesburg. Telephone: +27-11-728-5510
Financial Express Limited Registration number: 2405213. Registered office: 3rd Floor, Hollywood House, Church Street East, Woking, GU21 6HJ. Telephone +44-14-8378-3900
18

Managed Models - Track Record through the Cycle
19

Why partner with MitonOptimal
Independence: We are an independent, owner-managed investment business, with a presence in Channel
Islands, South Africa, London, the Isle of Man and Asia. We are platform, fund and fund manager agnostic.
Track record: We have offered DFM services, both internationally and in South Africa, for over a decade.
Investment expertise: We have experienced investment teams, located in both Guernsey and South Africa,
who are focused on investment research and portfolio management.
One size does not fit all: We customize our services to your needs as a financial planner and business
owner.
Administrative & Compliance experience: We have administered model portfolios for well over a decade
and have a highly experienced client service team to provide high quality administrative support.
20

Guernsey
(International Team)
Advisory Services
Fund Management
Guernsey
Advisory Services
Fund Management
South Africa
Advisory Services
Fund Management
Asset Consulting
South Africa
Advisory Services
Fund Management
Asset Consulting
Isle of Man
Advisory Services
Isle of Man
Advisory Services
Singapore
Client Relationship
Management for Group
International Services
Singapore
Client Relationship
Management for Group
International Services
21
United Kingdom
Advisory Services
Fund Management
United Kingdom
Advisory Services
Fund Management

MitonOptimal Group Corporate Structure – Global DFM
MitonOptimal International Limited
MitonOptimal
Asia (PTE) Ltd
(Singapore)
MitonOptimal
Guernsey
Limited
(Guernsey)
MitonOptimal
Portfolio
Management
(CI) Limited
(Guernsey)
Verity Life
Limited
(Guernsey)
MitonOptimal
Holdings (Pty)
Limited
(South Africa)
MitonOptimal
South Africa
(Pty) Limited
(South Africa)
MitonOptimal
Portfolio
Management
(Pty) Limited
(South Africa)
IP Management
Company (Pty)
Limited
(South Africa)
16%
Coram Asset
Management
(UK)
MitonOptimal
Portfolio
Management
(IoM) Limited
(Isle of Man)
Key
South Africa
Guernsey
Singapore
Isle of Man
United Kingdom
22

•We manage low cost CIS
solutions ( 79 bps -108 bps TER
for entire range)
•Includes Active and Passive
components
Standard Fund & FoF Solutions
•A core asset allocation fund
(house view split funding)
component complimented with
Indexed and Active Funds per
solution
• We have bespoke portfolios with
specific IFA client requirements
e.g. Prescient Life Proposal &
FSP High Net worth Clients, PPS,
Discovery Invest
SAA
•Dynamic Strategic Asset Allocation Process- annual meeting to dynamically adjust
• Weekly Risk Score Meeting can change the short term allocation - TAA
•Many factors can influence TAA implementation
• Short Term cycles and valuation mismatches/ Momentum/Market over-reactions
causing short term price inefficiencies/ Relative Valuations/Short Term Geopolitical event risks
TAA
Tailored / Managed
DFM Solution
Bespoke
Solution
Unitised DFM
Solution - CIS

MitonOptimal Value Proposition
Tailored
Model
Portfolios
Tailored
Model
Portfolios
Bespoke
Portfolio
Solutions
Bespoke
Portfolio
Solutions
MOPM
Managed
Model
Portfolios
MOPM
Managed
Model
Portfolios
MOSA
Managed
Model
Portfolio Suite
MOSA
Managed
Model
Portfolio Suite

The MitonOptimal Teams
Investment Professionals
DFM Manager Research & Coordination Team
DFM Implementation Team
DFM Investment Consulting Team (DFM Development)

Local – Investment Management Team
Roeloff Horne
Director & Head: Portfolio Management South Africa
Portfolio/Fund Modelling & Tactical Allocation Implementation
National Certificate: Financial Markets & Instruments:
30+ years of experience in the financial service industry
Scott Campbell
Group MD and CIO
Bachelor Business Studies (Accountancy) - Massey University, New Zealand:
Diploma Business Studies:
28 years of experience in the financial services industry
Joanne Baynham
Director & Head of Investment Strategy
Qualified Chartered Accountant (CA)
Qualified Chartered Financial Analyst® (CFA®).
Bachelor of Commerce
Postgraduate Diploma in Accounting
20 years of experience in the financial service industry
James Downie
Head of Asset Consulting
Bachelor of Science: Mathematics & Statistics:
Masters of Business Administration:
Certified Financial Planner :
30+ years experience in the financial service industry
Andy Pfaff
Head of Commodities
Bachelor of Administration LLB (Stellenbosch)
Derivatives Rules exam
Commodity Derivatives Trader exam
Junior, Ordinary & Senior Dealers exams
Fellow of SA Institute of Financial Markets (SAIFM)
Oscar De Waal
Head: Due Diligence Manager Research process &
documentation
Masters in Science (Biotechnology) (UFS):
B.Sc. Hon. (Geology) (UFS):
Certified Financial Planner:
National Certificate: Financial Markets & Instruments;
Simon Morrison
Head of Quants & Portfolio Manager
Bachelor of Commerce Financial Management:
Marissa Smit
Investment Analyst & Dealer
Bachelor of Commerce Financial Management (UPTA)
Armin Diem
Head of SA Equities
Bachelor of Social Science:
Economics Honours:

International - Investment Management Team
Scott Campbell
Group MD and CIO
Bachelor Business Studies (Accountancy) - Massey University, New Zealand:
Diploma Business Studies:
28 years of experience in the financial services industry
Joanne Baynham CA, CFA
Director & Head of Investment Strategy
Qualified Chartered Accountant (CA)
Bachelor of Commerce
Postgraduate Diploma in Accounting
Shaun McDade
MD of MitonOptimal Portfolio Management (CI) Ltd (Guernsey) &
Head of Portfolio Management (International)
Blair Campbell MCSI
Portfolio Manager (Guernsey)
Business Degree: Majored in Finance, from the Massey University
Kerry Kemp
Due Diligence Analyst (Guernsey)
30+ years of experience in the financial service industry.
Greg Easton IMC
Director (IOM) & International Sales
18 years of experience in the financial service industry.
Simon Morrison
Head of Quants & Portfolio Manager
Bachelor of Commerce Financial Management:
Simon Sharrott
Director, Portfolio Manager (Guernsey)
& Head of International Business Management
CISI – Chartered MCSI
Bachelor Arts Hons: Business and Finance Degree
10+ years of experience in the financial service industry.
James Sullivan
Director (UK) & Fund Manager
Financial Planning Certificate (FPC)
Investment Management Certificate (IMC)
Alan Blythe
MD (IOM) and Portfolio Manager
Chartered Associate of the Institute of Financial Services
Fellow of the Personal Finance Society
Chartered Financial Planner

Manager Research Co-Ordination
Riaan Maartens
Head: Portfolio Implementation
Email: Riaan@mitonoptimal.com
Phone: +27 (0) 72 292 0292
Oscar De Waal
Head: Manager Research
Email: oscar@mitonoptimal.com
Phone: +27 (0) 83 679 0287
George Dell
Director & Head DFM Business Development (SA)
Email: george@mitonoptimal.com
Phone: +27 (0) 82 809 4220

DFM Implementation team
Riaan Maartens
Head: Portfolio Implementation
Email: riaan@mitonoptimal.com
Phone: +27 (0) 72 292 0292
Rugshana Salie
Portfolio Implementation
Email: rugshana@mitonoptimal.com
Phone: +27 (0) 21 689 6908
Jolandi Slabbert
Compliance & Head: Operations
Email: jolandi@mitonoptimal.com
Phone: +27 (0) 76 553 1923
Ruwayda Hendricks
New Business Specialist
Email: ruwayda@mitonoptimal.com
Phone: +27 (0) 21 689 6908

SA Based DFM Development Team
George Dell – Sales Head
Director & Head of DFM Business Development (SA)
Email: george@mitonoptimal.com
Phone: +27 (0)82 809 4220
Cherie-Lee Stratford
Director & Head of DFM Business Development
(Offshore)
Email: cherie-lee@mitonoptimal.com
Phone: +27 (0)82 603 8306
Adva Lewitte
Investment Consultant - Gauteng
Email: adva@mitonoptimal.com
Phone: +27 (0)82 777 7825
Gabriel Botha
Investment Consultant - KwaZulu Natal
Email: gabriel@mitonoptimal.com
Phone: +27 (0)83 601 5483
Ferdinand Preller
Client Portfolio Manager – FreeState
Email: ferdi@mitonoptimal.com
Phone: +27 (0)79 597 8519

The 5 P’s
Partnership
People
Philosophy
Process
Non-Prescriptive

Investment Philosophy
Our investment philosophy is unashamedly simple,
Diversification
Unconstrained global asset allocation process
Absolute mind-set
Achieve the objectives of your investors

Cash Plus
CPI Plus 2%
CPI Plus 4%
CPI Plus 6%
Average Risk
Returns
CPI plus 7%
Absolute Return mind-set suite of portfolios
Any other achievable target can be accommodated and designed

South Africa
Great Westerford, Suite 202,
South Wing, 2nd Floor,
240 Main Road, Rondebosch,
Cape Town, 7700,
South Africa
Tel. +27 (0)21 689 3579
Fax. +27 (0)21 685 6944
Email: mail@mitonoptimal.com
Singapore
MitonOptimal Asia Pte Limited
98A Amoy Street
069918
Singapore
Tel. +65 (0)6222 0489
Fax. +65 (0)6222 1489
Email: phil@mitonoptimal.com
Guernsey
MitonOptimal Portfolio Management (CI) Limited
PO Box 354
Suite 1, Weighbridge House
Lower Pollet
St. Peter Port
Guernsey, GY1 3XF
Tel +44 (0)1481 740044
Fax +44 (0)1481 727355
Email: info@mitonoptimal-ci.com
Isle of Man
MitonOptimal Portfolio Management (IoM) Limited
11 Myrtle Street
Douglas
Isle of Man IM1 1ED
Tel +44 (0)1624 619180
Email: enquiries@mitonoptimaliom.com
United Kingdom
Coram Asset Management Limited
Royal Mead
Railway Place
Bath
BA1 1SR
United Kingdom
Tel +44 (0)1225 632250
Email: mel.kennard@coramam.com
South Africa
MitonOptimal Portfolio Management (Pty) Limited
25 Quantum Street
Technopark
Stellenbosch 7600
Western Cape
South Africa
t: +27 (0)21 689 6908
Email: mail@mitonoptimal.com

The information contained in this presentation was provided by MitonOptimal South Africa (Pty) Limited Registration No. 2005/032750/07. Authorised Financial Services Provider
License No. 28160 (“the FSP”).
The content of this presentation is for information purposes only and does not constitute an offer or invitation to any person. Any opinions expressed are of a general nature only,
are subject to change and are not to be interpreted as advice in terms of FAIS. You should consult an adviser who will be able to provide appropriate advice that is based on your
specific needs and circumstances.
The information and opinions contained have been compiled or arrived at from sources believed to be reliable and given in good faith but no representation is made as to their
accuracy, completeness or correctness. Neither the FSP nor its subsidiaries will be liable for any losses or damages as a result of making use of this information. Except to the
extent that the source has been acknowledged, this presentation and information herein is copyright of the FSP and may not be copied or reproduced without the prior consent of
the FSP.
MitonOptimal South Africa (Pty) Ltd, its directors, officers, employees and their associates may have an interest in the products, services or service providers referred to herein.
The value of investments and the income from them may vary and you may realise less than the sum invested. Past performance is not necessarily a guide to future performance
and no guarantees are offered in respect of investment returns and/or capital invested. Tax assumptions may change and you should rely on your own tax adviser when
considering your personal circumstances. The funds may have exposure to securities denominated in currencies other than Rands and changes in exchange rates may have an
adverse impact upon the fund performance. The investment may not be suitable for all recipients of this publication.

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