FOORD ASSET MANAGEMENT

BCI CONFERENCE

June 2017

STRATEGIES FOR SUCCESSFoord’s experience

• Play to your strengths and keep it simple – can’t be all things to all people

• “To finish first, first you must finish” – diversify your portfolios, but also your business

Investment strategies, investor mix, fee structures

• Invest in people – manage the generations for succession planning

• Build a healthy balance sheet – you’ll need it some day

• So much depends on reputation – guard it fiercely

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-6%

-4%

-2%

0%

2%

4%

6%

0

50

100

150

200

250

300

350

400

450Ju

n 4

7

Ap

r 5

0

Feb

53

Dec

55

Oct

58

Au

g 6

1

Jun

64

Ap

r 6

7

Feb

70

Dec

72

Oct

75

Au

g 7

8

Jun

81

Ap

r 8

4

Feb

87

Dec

89

Oct

92

Au

g 9

5

Jun

98

Ap

r 0

1

Feb

04

Dec

06

Oct

09

Au

g 1

2

Jun

15

Business up/down cycle Real GDP S&P

GET THE BIG CALLS RIGHTEconomic expansions = higher earnings & multiples

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Source: Bureau of Economic Analysis

FOLLOW THE EARNINGS, AND BE PATIENT

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Source: IRESS MD RSA

60

600

5

10

20

40

80

160

320

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Aspen Price (LHS) Aspen Earnings (RHS)

As important as picking the winnersAVOID THE LOSERS

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Source: IRESS MD RSA

0

50

100

150

200

250

300

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Arcelor Mittal Sappi Gold Miners

INVEST WITH A MARGIN OF SAFETYFTSE JSE PRICE & EARNINGS

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-100%

-50%

0%

50%

100%

150%

200%

60

600

6 000

60 000

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

Gap FTSE JSE FTSE JSE Earnings

Source: INET

-30%

-10%

10%

30%

50%

70%

1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Excess return Inflation** Foord*

SHORT TERM RETURNS ARE RANDOMRolling 1-year returns vs CPI at 30 April 2017

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*Foord global balanced composite. Returns gross of fees.**Source: Statistics South Africa

-5%

0%

5%

10%

15%

20%

25%

30%

35%

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2013 2015

Excess return 5% hurdle Inflation** Foord*

TIME REWARDS PATIENT INVESTORSRolling 7-year returns vs CPI + 5% at 30 April 2017

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Too many investors give up this…

…to protect against this?

*Foord global balanced composite. Returns gross of fees.**Source: Statistics South Africa

FOORD EQUITY FUND7-year returns vs sector median

| 97 year rolling returns Foord Equity Fund & ALSI vs SA General Equity sector, all relative to median manager (Source: Morningstar)

-15

-10

-5

0

5

10

2009 2010 2011 2012 2013 2014 2015 2016

Q1 Q2 Q4 Q3 Foord FTSE ALSI

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7-year returns vs sector and inflationFOORD BALANCED FUND

7 year rolling returns Foord Balanced Fund & Inflation + 7% vs SA Multi Asset High Equity, all relative to median manager (Source: Morningstar)

-10

-8

-6

-4

-2

0

2

4

6

8

10

2009 2010 2011 2012 2013 2014 2015 2016

Q1 Q2 Q4 Q3 Foord Inflation

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7-year returns vs sector and inflationFOORD FLEXIBLE FUND OF FUNDS

7 year rolling returns Foord Flexible Fund of Funds & Inflation + 7% vs Worldwide Flexible sector, all relative to median manager (Source: Morningstar)

-8

-6

-4

-2

0

2

4

6

8

Mar 15 Jun 15 Sep 15 Dec 15 Mar 16 Jun 16 Sep 16 Dec 16 Mar 17

Q1 Q2 Q4 Q3 Foord Inflation

Low yield, low return environment

• Global

Interest rate differentials

Political risks remain elevated

Increased volatility (Trump, commodity prices, geopolitics)

• Local

Political risks (ANC leadership elections)

Structural problems – S.A. Inc under pressure (taxes, lower income growth)

Rand under pressure – Downgrades

CURRENT INVESTMENT PARADIGM

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ASSET ALLOCATION COMPARISON30 April 2017 (%)

FOORDCONSERVATIVE

FOORDBALANCED

FOORDFLEXIBLE

FOORDINTERNATIONAL

SOUTH AFRICA 70 73 32 -

EquitiesPropertyCorporate bondsGovernment bondsCommoditiesMoney market

174285

34

384266

17

152--2

13

------

FOREIGN 30 27 68 100

EquitiesPropertyCommoditiesMoney market

23-16

22-14

5511

11

6533

29

TOTAL 100 100 100 100

Total equity exposure 41 60 70 65

• Cautious approach

• Maximum offshore allowance

• Non-resource rand hedge preferred

• Liquidity accumulation

• Well diversified portfolio

• Quality prevails

STRATEGY SUMMARY

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In safe hands – capital preservation focus

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THANK YOU

COPYRIGHT 2017 FOORD. ALL RIGHTS RESERVED

Foord Unit Trusts (RF) (Pty) Ltd (Foord Unit Trusts) is an approved CISCA Management Company (#10). Assets are managed by Foord Asset Management (Pty) Ltd (Foord), an authorised Financial Services Provider (FSP: 578). CollectiveInvestment Schemes in Securities (unit trusts) are generally medium- to long-term investments. The value of participatory interests (units) may go down as well as up and past performance is not necessarily a guide to the future.Performance is calculated for the portfolios. Individual investor performance may differ as a result of the actual investment date, the date of reinvestment and withholding taxes Performance may be affected by changes in the market oreconomic conditions and legal, regulatory and tax requirements. Foord Unit Trusts does not provide any guarantee either with respect to the capital or the performance return of the investment. Unit trusts are traded at ruling prices andcan engage in borrowing. Foord Unit Trusts does not engage in scrip lending. Commission and incentives may be paid and if so, this cost is not borne by the investor. A schedule of fees and charges, including performance fees, andmaximum commissions is available on www.foord.co.za or directly from Foord Unit Trusts. Distributions may be subject to mandatory withholding taxes. Portfolios may include underlying foreign investments. Fluctuations or movementsin exchange rates may cause the value of underlying foreign investments to go up or down. Underlying foreign investments may be adversely affected by political instability as well as exchange controls, changes in taxation, foreigninvestment policies, restrictions on repatriation of investments and other restrictions and controls which may be imposed by the relevant authorities in the relevant countries. A fund of funds invests only in other Collective InvestmentScheme portfolios, which may levy their own charges, which could result in a higher fee structure. A feeder fund is a portfolio that, apart from assets in liquid form, consists solely of units in a single portfolio of a Collective InvestmentScheme which could result in a higher fee structure. Foord Unit Trusts is authorised to close any of their portfolios to new investors in order to manage them more efficiently in accordance with their mandates. This document is not anadvertisement, but is provided exclusively for information purposes and should not be regarded advice, an offer or solicitation to purchase, sell or otherwise deal with any particular investment. Economic forecasts and predictions arebased on Foord’s interpretation of current factual information, and exploration of economic activity based on expectation for future growth under normal economic conditions, not dissimilar to previous cycles. Forecasts andcommentaries are provided for information purposes only and are not guaranteed to occur. While we have taken and will continue to take care that the information contained herein is true and correct, we request that you report anyerrors to Foord at unittrusts@foord.co.za. The document is protected by copyright and may not be altered without prior written consent.

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