1. For Professional Investors only – Not for public distribution The illiquidity argument – ways in which an inflation-plus return can be achieved using illiquid investments January 2015 Andrew McCaffery, Global Head of Alternatives

2. 1 Diversification vs. growth potential Diversification against traditional asset classes Liquid StrategiesPrivate MarketsReal Assets Risk assets exposure / real growth Currencies Systematic Global Macro Discretionary Global Macro Long/Short Equity Event Driven Listed Private Equity Venture Capital Growth Capital Private Debt Buyouts Opportunistic Private Property Private Equity Secondaries Property Secondaries Private Equity Co-investments Core Property Private Energy Physical Commodities Agriculture Timber Infrastructure Private Real Estate Secured Income Property Liquidity Less More By accessing non-traditional alpha sources many alternatives offer growth and diversification potential Relative Value Strategies Volatility based strategies Tail Hedge/Options based Broad characteristics

3. 2 What does illiquidity offer? What is the potentialHow is it provided Private market inefficiencies caused by Smaller universe of players Costs/skills required to participate Asymmetry of information Growing, “real” cash flows Multiple and increasing cash flow generation, e.g.: Investment gains (PE) Inflation linked contracts (PPP Infrastructure) The “illiquidity” premium to public markets Return drivers beyond market direction Less frequent valuation points Positive diversification benefits

4. 3 With opportunity, comes challenge Enhanced returns Lower volatility More resilient performance Protection against adverse markets - Limited Transparency - Illiquidity - High Investment minimums - High Fees - Performance measurement - Complexity - Cash- flow/commitment management Enhanced returns Lower volatility More resilient performance Protection Transparency Illiquidity Fees Performance measurement Cash-flow/commitment management

5. 4 Managing liquidity: cash-flow management in private market allocations Self Liquidating Portfolio Structure For illustrative purposes only A strategy designed to achieve a self-funding portfolio, with more consistent long-term exposures Allows for diversification across vintage years, geographies and sectors Secondary of Secondaries Early diversification Quick cash generation Co-Investments Accretive to returns Portfolio concentration Lower fees Secondary of Primary High conviction invested assets Access to strong funds from historic vintages Primary ‘Best ideas’ manager selection Bottom-up exposure to chosen markets

6. 5 Private market and real asset linked investments have performed well relative to inflation and overall investment returns Illiquid Investments 1.Bloomberg, Preqin 2014. Median Public Pension Fund Returns by Asset Class as of 31 December 2013 Past performance is no guarantee of future performance and the value of investments can go down as well as up 10 year time horizon (as at Dec 13) 1 Median Public Pension Fund Returns by Asset Class

7. 6 If you do not require high liquidity throughout your portfolio, why pay for it?

8. 7 Investors should be aware that past performance is not a guide to future results. The value of investments, and the income from them, can go down as well as up and your clients may get back less than the amount invested. The views expressed in this presentation should not be construed as advice on how to construct a portfolio or whether to buy, retain or sell a particular investment. The information contained in the presentation is for exclusive use by professional customers/eligible counterparties (ECPs) and not the general public. The information is being given only to those persons who have received this document directly from Aberdeen Asset Management (AAM) and must not be acted or relied upon by persons receiving a copy of this document other than directly from Aberdeen Asset Management. No part of this document may be copied or duplicated in any form or by any means or redistributed without the written consent of Aberdeen Asset Management. Issued by Aberdeen Asset Managers Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom. For Professional Investors only – Not for Public Distribution Important information