1. 1 global investment management Navigating a diverging world October 2015 Glyn Owen

2. 2 momentum global investment management Global equities: a diverging and stalled world Source: Bloomberg. Data as at 16 October 2015. %

3. 3 momentum global investment management Global bond yields close to all time lows Source: Bloomberg. Data as at 16 October 2015.

4. 4 momentum global investment management Commodity prices have collapsed Source: Bloomberg. Data as at 22 October 2015. Industrial metals and oil

5. 5 momentum global investment management The new normal: global growth stuck at 2.5% Contribution to World GDP growth (y/y), % Source: Schroders. Data as at August 2015 2.4

6. 6 momentum global investment management Global trade growth hits new post-crisis low Source: Thomas Datastream, Schroders. Data as at 7 September 2015

7. 7 momentum global investment management Global growth is fading – and diverging: Global PMI for manufacturing Source: J.P Morgan Asset Management. Data as at 30 September 2015. PMI: Purchasing Managers’ Index

8. 8 momentum global investment management Debt has continued to rise post GFC Source: McKinsey Global Institute, “Debt and (not much) deleveraging”. Data as at February 2015 Q4 2000Q4 2007Q2 2014 20 83 87 22 26 19 37 33 38 33 142 45 58 56 40 199 246%269%286% Total debt as a share of GDP Total7.35.3 Household8.52.8 Corporate5.75.9 Government5.89.3 Financial9.42.9 Compound annual Growth rate, % 2000-7 2007-14 $57 trillion increase Global stock of debt outstanding, $ trillion

9. 9 momentum global investment management China: credit bubble? Source: BNY Mellon. Data as at May 2015 2000 2007 Q2 2014 2.17.428.2 Total debt $ trillion Households Non-financial corporate Financial institutions Government Debt to GDP ratio % By country, Q2 2014 China Australia US Germany 283 274 269 258 23 7 83 8 42 24 72 20 55 65 125 38 121 158 283 55 31 89 80 65 125 38 61 69113 36 6777 7054

10. 10 momentum global investment management China: Rebalancing of economy is inevitable Source: CIA World factbook

11. 11 When entering a graph or chart please change font size to Arial 12pt. Please use the heading and source text blocks provided. momentum global investment management China: Demographics time bomb Source: http://www.china-profile.com/data/fig_WPP2010_CEU_Total-Population.htm.http://www.china-profile.com/data/fig_WPP2010_CEU_Total-Population.htm Total Population in China, Europe and the United States of America (compared with India, Brazil and Nigeria), 1950-2100

12. 12 momentum global investment management China: inexorable slowdown in growth Source: J.P Morgan Asset Management. Data as at 30 September 2015. ‘15 2Q15: 6.9%

13. 13 momentum global investment management China: Exporting deflation Source: Bloomberg. Data as at 30 September 2015. % Producer Price Index % YoY

14. 14 momentum global investment management Deflation is prevalent across the developed world Source: Bloomberg. Data as at 30 September 2015. % US inflation indices

15. 15 momentum global investment management Exports to China as a % of GDP Source: IMF, ECB. Data as at September 2015. China takes in 10% of global imports % of GDP

16. 16 momentum global investment management Exposure to emerging markets: US, Europe, Japan, % of GDP Source: Bloomberg, Credit Suisse, Momentum Investments. Data as at October 2015.

17. 17 momentum global investment management Impact of China growth shock on real GDP Source: J.P. Morgan; Sample 1Q00 to 2Q15.. %pt cumulative impact 1%pt real GDP China impulse after 4 quarters

18. 18 momentum global investment management Commodity producers are the most vulnerable to China slowdown Source: IMF, October 2015 China’s share of global consumption (%)

19. 19 momentum global investment management Slowdown in China concentrated in manufacturing and production Source: NBS, Momentum Investments. Data as at October 2015.

20. 20 momentum global investment management Turning point: bank lending picking up in Eurozone Source: IMF, October 2015 y/y, % 1996199820002002200420062008201020122014 2016 US Eurozone

21. 21 momentum global investment management Advanced economy consumption recovering Source: Standard Life, October 2015..

22. 22 momentum global investment management Global monetary stimulus: Change in central bank balance sheets Source: Deutsche Bank, Datastream, September 2015 6m changes in CB assets (USDbn – at fixed FX rates)

23. 23 momentum global investment management Central bank quantitative easing purchases Source: J.P Morgan Asset Management. Data as at 30 September 2015.

24. 24 momentum global investment management One-way FOMC revisions Source: Deutsche Bank, October 2015..

25. 25 momentum global investment management Fearing the Fed? Source: BlackRock, May 2015.. Returns of stocks and bonds around first Fed rate rise

26. 26 momentum global investment management Valuations have improved in some bond sectors Source: Bloomberg. Data as at 22 October 2015. % US high yield and investment grade bond spreads vs US treasuries

27. 27 momentum global investment management Equity valuations still reasonable Source: Bloomberg. Data as at 30 September 2015. PE ratios of global developed and emerging equity markets

28. 28 momentum global investment management Equities – the income asset class? Source: Bloomberg. Data as at 21 October 2015. * Forward looking estimates. Price/Earnings*Dividend yield* 10-year Government bond yields United States17.22.2%2.0% Eurozone14.63.7%0.6% United Kingdom15.94.1%1.8% Japan14.61.9%0.3% MSCI World16.72.6%- MSCI Emerging Markets 12.32.9%-

29. 29 momentum global investment management Conclusions and implications for portfolio construction Global growth has stalledPressure on corporate earnings Powerful deflationary forcesFinancial strength is critical Policy constraintsMonetary policy looser for longer Subdued growth & low ratesModest return expectations Sustainable recovery in DMVery long cycle, stay invested China’s rebalancing, EM structural problems & policy mis-steps Increased risks and volatility Periods of volatility are inevitable Creates valuation opportunities to add to investments

30. 30 momentum global investment management Asset allocation: Harmony USD portfolios USD Balanced USD Growth Source: Momentum GIM. Positions as at 30 September 2015 USD BalancedAsset classUSD Growth 46.5%Equity70.7% 39.0%Fixed Income18.5% 5.6%Property5.6% 0.3%Commodities0.4% 8.6%Cash4.8% 100.0%Total100.0%

31. 31 momentum global investment management Harmony performance vs. cash, bonds and equities Source: Bloomberg. Data as at 16 October 2015 Harmony USD Growth Harmony USD Balanced MSCI World MSCI Emerging Markets USD LIBOR 7 Day Citigroup WorldBIG

32. 32 momentum global investment management In case you thought you had saved enough: Life expectancy and pension shortfall Source: J.P Morgan Asset Management. Data as at 30 September 2015.

33. 33 momentum global investment management Contact: Russell Andrews Head of Distribution Services Momentum Global Investment Management russell.andrews@momentum.co.uk T: +44 207 618 1803 www.momentumgim.co.uk

34. 34 global investment management Disclaimer This document is only intended for use by the original recipient, either a Momentum GIM client or prospective client, and does not constitute an offer or solicitation to any person in any jurisdiction in which it is not authorised or permitted, or to anyone who would be an unlawful recipient. The original recipient is solely responsible for any actions in further distributing this document, and in doing so should be satisfied that there is no breach of local legislation or regulation. This document should not be reproduced or distributed except via original recipients acting as professional intermediaries. This document is not for distribution in the United States. Prospective investors should take appropriate advice regarding applicable legal, taxation and exchange control regulations in countries of their citizenship, residence or domicile which may be relevant to the acquisition, holding, transfer, redemption or disposal of any investments herein solicited. Any opinions expressed herein are those at the date this document is issued. Data, models and other statistics are sourced from our own records, unless otherwise stated. We believe that the information contained is from reliable sources, but we do not guarantee the relevance, accuracy or completeness thereof. Unless otherwise provided under UK law, Momentum GIM does not accept liability for irrelevant, inaccurate or incomplete information contained, or for the correctness of opinions expressed. The value of investments in discretionary accounts, and the income derived, may fluctuate and it is possible that an investor may incur losses, including a loss of the principal invested. Past performance is not generally indicative of future performance. Investors whose reference currency differs from that in which the underlying assets are invested may be subject to exchange rate movements that alter the value of their investments. Under our multi-management arrangements, we selectively appoint underlying sub-investment managers and funds to actively manage underlying asset holdings in the pursuit of achieving mandated performance objectives. Annual investment management fees are payable both to the multimanager and the manager of the underlying assets at rates contained in the offering documents of the relevant portfolios (and may involve performance fees where expressly indicated therein). Momentum Global Investment Management (Company Registration No. 3733094) has its registered office at The Rex Building, 62 Queen Street, London EC4R 1EB. Momentum Global Investment Management Limited is authorised and regulated by the Financial Conduct Authority in the United Kingdom, and is an authorised Financial Services Provider pursuant to the Financial Advisory and Intermediary Services Act 37 of 2002 in South Africa. © Momentum Global Investment Management Limited 2015