Stanlib Growth Fund - Old Mutual

Stanlib Growth Fund
OMAC Actuaries & Consultants
November 2009
Richard Middleton

The Growth Franchise Team: Our Credentials
RICHARD MIDDLETON
●
Head Growth Franchise
● Managed Capital Growth Mutual Fund since 2002
●
●
11 Years Investment Experience
● RMB, Liberty & Stanlib Asset Management
● Resources & Industrials Analyst
BSc(Eng), MBA
KOBUS NELL
Assistant Portfolio Manager/
Research Analyst
SHOLTO DOLAMO
• Assistant Portfolio Manager/
Resources Analyst
1 Year Investment Experience
Stanlib Asset Management
Equity Dealer
CA(SA), CFA
3 Years Investment Experience
BSc(Chem), MSc (Mat), MBA

Agenda
• Investment Philosophy
• Investment Process
• Performance & Market Outlook
3

Investment Philosophy
We are passionate about discovering and investing in GROWTH
COMPANIES which have superior relative earnings growth potential.
Although we are active managers, we aim to hold these companies for
the long term, thereby generating substantial capital returns for our
clients.

Investment Philosophy
We Believe:
Outperformance is generated by investing in companies with high earnings growth;
In buying attractively priced, quality companies, including those “out of favour”
cyclical ones;
That a competitive advantage is created by “beating the street”, and buying/selling at
the right time;
That in the short term, markets are not efficiently priced;
That the consistent application of a robust investment process will lead to long term
outperformance;

Domestic Equity Returns
Contribution to total (geometric) returns (% p.a.)
30
28
26
24
22
20
18
16
14
12
10
8
6
4
2
0
-2
28.2
6.8
18.9
19.4
18.3
17.3
0.3
2.4
0.1
17.4
12.4
17.6
15.5
13.2
4.5
2.9
2.6
2.7
2.8
-0.7
48 years 20 years 15 years 10 years 5 years
Dividend yield Earnings growth Rating change Total return
30
28
26
24
22
20
18
16
14
12
10
8
6
4
2
0
-2
Source: CSSS
If earnings growth is stable, returns should also be.

Rolling Earnings growth forecasts
SECTOR 1 YEAR 2 Yr (CAGR)
RESOURCES 24.0% 58.1%
FINANCIALS 15.7% 25.3%
INDUSTRIALS 19.9% 19.5%
ALL SHARE 21.3% 38.9%

Agenda
• Investment Philosophy
• Investment Process
• Performance & Market Outlook
8

Investment Process
Stock Selection:
Our investment universe is divided into a BLUE CHIP, BIG BLUE and BLUE SKY
universes;
Each of the universes has stock specific limits which are dependant on risk, defined
by track record, liquidity, market cap, quality of management and valuation.
Each company is rated using both internal & external analyses;
The rating combines both company valuation and quality of management;
Currently, our stock database consists of 150 companies

Investment Process
Portfolio Construction:
Once the companies qualify for investment, the weights at which they are
included in the portfolio is determined by their ratings;
We have expanded the number of companies included in the Fund, but would like
to limit these to a maximum of 50;
We sell stocks when their overall rating becomes expensive relative to its historic
mean (or if we make a judgement error);
We are part of the market and risk being caught up in its emotions. HOWEVER,
we believe our construction process to be ROBUST, CONSISTENT & EMOTION FREE

Agenda
• Investment Philosophy
• Investment Process
• Performance & Market Outlook
11

When does the Fund outperform?
High Earnings Growth Co’s Have Outperformed..........When Interest Rates Decline
RELATIVE RETURN INDEX

%
SA Interest Rates
18
17
16
15
14
13
Prime rate
12
11
10
9
8
7
Repo rate
6
01 02 03 04 05 06 07 08 09 10

Growth fund Performance vs Market

Themes: Value & Growth
JSE indices: Growth/Value, ALSI/Dividend Plus (x 1.4)
1.7
Growth/Value
1.6
ALSI/Dividend Plus
1.5
1.4
1.3
1.2
1.1
1.0
Turning
point ?
03 04 05 06 07 08 09 10 11
Source: I-Net, Macquarie Research, October 2009
If growth is trigger, current uptick consistent with recent bounce in earnings growth.
Page 15

16
Global Wave Improving

17
Performance After Troughs in the Global Wave

Thank You