1. In-depth. Informed. Independent. Copyright OBSR Money Marketing Fund of Funds Invitational, Glasgow Fund of Funds – The State of Play Nigel Whittingham Director Old Broad Street Research 25 June 2009

2. Copyright OBSR In-depth. Informed. Independent. Growth in assets under management over the past 5 years (March 2005 – March 2009) Source: IMA Percentage Growth “External” Fund of Fund Assets98% Total Funds23% External Fund of Fund’s4% of Total Funds

3. Copyright OBSR In-depth. Informed. Independent. How have they performed? % of annualised compound return IMA Sector Average of OBSR Rated Funds Sector AverageOutperformance Active Managed4.75% (7)3.70% Balanced Managed6.04% (6)3.62% Cautious Managed4.82% (5)2.14% Global Growth5.03% (5)3.87% Performance over 5 years (31.5.04 – 29.5.09) Source: Hindsight

4. Copyright OBSR In-depth. Informed. Independent. Is the rationale for fund of funds still valid? IFA investment needs Source: Research for a major investment manager and a major life and pensions provider

5. Copyright OBSR In-depth. Informed. Independent. Is the rationale for fund of fund’s still valid?  Do they meet the needs of “new model advisers” and “wealth managers”? – Move away from “product” to “service”  Do they offer enough risk profiles for clients looking for a “one stop” solution?  Do they still provide a solution to the regulatory challenge faced by advisers?  Stability of teams?

6. Copyright OBSR In-depth. Informed. Independent. The new competition  Risk based models (stochastic tools combined with guided architecture)?  Model portfolios?  Risk based OEICs plus risk assessment tool?  “New style” managed funds?  “Distributor influenced funds”?

7. Copyright OBSR In-depth. Informed. Independent. Different approaches and innovtion  UCITS III and NURS impact  OBSR categorisation basis  Asset allocation – Fixed or active  Return bias – Relative, absolute, target Asset AllocationReturn bias RelativeAbsoluteTarget FixedTraditionalInnovation ActiveTraditionalInnovation  Risk based models  F&C Lifestyle funds  Skandia

8. Copyright OBSR In-depth. Informed. Independent. Different approaches and innovation  Are they really funds of funds? Percentage of assets invested in funds From 27% to 100%

9. Copyright OBSR In-depth. Informed. Independent.