23 JULY 2009 OCTOPUS INVESTMENTS Paul Chedzey Manager, Strategic Partnerships October 2010

Survey Results How Octopus can help Asset allocation – the case for true multi asset Active V’s Passive Defensive V’s Growth How Octopus can help Agenda

MISMATCHED VALUE What matters to clients? For illustration purposes only

OCTOPUS PORTFOLIO MANAGER “... a low cost, high specification, discretionary managed portfolio, with no minimum investment...”

Asset Allocation – a short history Pre 2002 – 3 asset classes And that’s where most left it! Cash Bonds Equity Cash UK Bond Int. Bond UK Gilt UK EquityProperty Emerging markets Pacific ex Japan Japan Equity North American Equity 2002 – DT, B&H

Asset Allocation – a short history 2004 UCITS 3 Birth of Multi-assets Ability to use additional asset classes, such as: Alternatives Hedge funds Commodities 2008 Lehman Brothers: Does Multi Asset work? Yes, diversification is the driver

7 Source: North/ Lipper. Data 10 calendar years to 31 st December Diversification by Asset Class Commodities 20.3% Property 7.1% Commodities 11.2% Euro Equities 29.8% Property 18.9% Commodities 37.0% Euro Equities 20.1% Commodities 18.5% Global Bonds 45.1% UK Equities 30.1% UK Corp Bonds 11.2% UK Corp Bonds 6.1% Property 10.4% UK Equities 20.9% Euro Equities 13.8% Euro Equities 24.1% Property 18.1% Euro Equities 15.7% Gilts 12.8% Euro Equities 20.1% Property 10.5% Gilts 3.0% UK Corp Bonds 10.0% US Equities 15.7% UK Equities 12.8% UK Equities 22.0% UK Equities 16.8% Global Bonds 9.5% Commodities 5.6% Commodities 19.8% Global Bonds 10.4% Global Bonds 1.8% Gilts 9.3% Property 11.2% UK Corp Bonds 6.7% Property 18.8% US Equities 1.6% UK Equities 5.3% UK Corp Bonds -4.1% US Equities 12.6% Gilts 8.7% US Equities -9.6% Global Bonds 7.9% UK Corp Bonds 5.4% Gilts 6.6% US Equities 17.3% UK Corp Bonds 0.7% Gilts 5.3% US Equities 12.8% UK Corp Bonds 10.8% Euro Equities 1.7% UK Equities 13.3% UK Equities -22.7% Global Bonds 4.0% Global Bonds 4.3% UK Corp Bonds 9.0% Gilts 0.7% US Equities 3.7% Property -22.5% Property 2.2% US Equities -1.9% Commodities -14.1% Euro Equities -27.1% Gilts 2.1% Commodities 3.7% Gilts 7.9% Commodities -0.4% UK Corp Bonds 1.8% Euro Equities -24.0% Gilts -1.2% UK Equities -5.9% Euro Equities 20.1% US Equities 29.6% Commodities -2.1% US Equities 3.4% Global Bonds 7.3% Global Bonds -4.7% Property 5.5% UK Equities 29.9% Global Bonds 7.6%

Why drift matters - illustration 8 25% 50% 75% 100% Months Equities Cash Fixed Risk Profile 5 Risk Profile 6 Portfolio Breakdown Point OPM Rebalances Actual rebalance

Rebalancing and drift “We also saw an increase in the number of complaints about portfolio managers not responding quickly enough to difficult investment conditions.” Financial Ombudsman Annual Review 2009/2010

Tactical asset allocation manager risk IMA Cautious Managed Sector Source: Lipper. IMA Cautious Managed returns over discrete 12 month calendar periods 01/01/07to 31/12/09. Sterling returns. Net income reinvested

Investment focus “Consumers have complained to us that they believe the description of some funds as “cautious” failed to reflect the real risks involved.” Financial Ombudsman Annual Review 2009/2010

For illustrative purposes Investment allocation and selection

13 Active v Passive – 5 years Source: Lipper, Octopus Investments

14 When buying passive works Source: Lipper, Octopus Investments Active (IMA UK All Companies)Passive TopSector Av.BottomI Share FTSE /03/09 – 31/12/

15 When buying active works Source: Lipper, Octopus Investments Active (IMA UK All Companies)Passive TopSector Av.BottomI Share FTSE /01/10 – 22/07/

16 Tilting to trend Source: Lipper, Octopus Investments

17 Tilting to trend Source: Lipper, Octopus Investments

For illustrative purposes Investment allocation and selection

* For illustrative purposes, portfolios will contain a greater number of funds International Equity UKEquityUKEquity AlternativeStrategiesAlternativeStrategies Fixed Income iSHARES S&P 500 USD Neptune European Opportunities Nevsky Global Emerging Markets Majedie UK Equity Schroder UK Alpha Plus iSHARES FTSE 100 Thames River Longstone JP Morgan Global Convertibles JPM Cautious Total Return Franklin Templeton Global Bond iShares FTSE All Stocks Gilts M&G Strategic Corporate Bond Ten Investment Profiles

iSHARES S&P 500 USD Neptune European Opportunities Nevsky Global Emerging Markets Majedie UK Equity Schroder UK Alpha Plus iSHARES FTSE 100 Thames River Longstone JP Morgan Global Convertibles JPM Cautious Total Return Franklin Templeton Global Bond iShares FTSE All Stocks Gilts M&G Strategic Corporate Bond * For illustrative purposes, portfolios will contain a greater number of funds International Equity UKEquityUKEquity AlternativeStrategiesAlternativeStrategies Fixed Income Ten Investment Profiles

OCTOPUS PORTFOLIO MANAGER “... a low cost, high specification, discretionary managed portfolio, with no minimum investment...” ANY QUESTIONS?

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23 JULY 2009 QUESTIONS & ANSWERS Paul Chedzey Old Bailey London EC4M 7AN