Risk Managed Funds – quarterly update Hector Kilpatrick, Chief Investment Officer 27 th January 2016 for professional advisers only

Welcome The objectives of this session are to explain: why we see echoes of 2007 & Q in the markets why we are becoming less bullish on Japanese equities why a US ‘goldilocks’ economy is essential to support market levels

US Manufacturing & Services ISM Services ISM in Green Source: ISM, Bloomberg Time (1999 => 2015)

US Manufacturing ISM & recessions ISM <45…… 13x since WW2, 11x recession

US manufacturing and trade inventories/sales Time (2006 => 2015) Source: Bloomberg, US Census Bureau

US credit cycle – lending to corporates Time (2001 => 2015) Source: Bloomberg, Fed. Reserve

Barclays US High Yield spread index Time (2006 => 2016) Source: Bloomberg, Barclays

UK saving rate Time (1980 => 2015) Source: Bloomberg, ONS

UK Halifax Residential Prices (all dwellings, NSA) Time (1996 => 2015) Source: Bloomberg, Lloyds

Japanese Yen vs USD Time (2006 => 2016) Source: Bloomberg

10 year Japanese Gov. debt yield (%) Time (2006 => 2016) Source: Bloomberg

BoJ’s holdings in Japanese equity ETFs

US Bank sector rel performance vs S&P500 Time (2014 => 2015) Source: Bloomberg, KBW

Portfolio positioning Heavy: Light: Absolute returnEquities Strategic bondGilts CashProperty Source: Cornelian

Risk Managed Funds * The Managed Income Fund has not been rated by Distribution Technology but is managed by Cornelian to sit below upper limit of DT5. Managed Income Fund was launched on 20 th March 2015 and it has not yet been included into the Defaqto Risk Targeted Fund Family. ** The investment team constructs the portfolio to ensure that the expected volatility of each fund stays below the maximum expected volatility level ascribed, in normal circumstances. *** Net of fees, over the investment cycle. Source: Cornelian, DT, Defaqto

Performance to end December 2015

Risk Warning 17 Cornelian Asset Managers Limited is authorised and regulated by the Financial Conduct Authority. This material is directed at professional financial advisers only. You should remember that the value of investments and the income derived there from may fall as well as rise and you may not get back the amount that you invest. Past performance is not a guide to future returns. Fund performance figures do not include any initial charge; if this is paid it will reduce performance from that shown. Opinions expressed whether in general or both on the performance of individual securities and in a wider economic context represent the views of Cornelian Asset Managers Limited at the time of preparation. They are subject to change and should not be interpreted as investment advice. Cornelian Asset Managers Limited and connected companies, clients, directors, employees and other associates, may have a position in any security, or related financial instrument, issued by a company or organisation mentioned in this document.