For professional advisers only.

Multi-asset investing: risks and rewards

Marcus Brookes – Head of Multi-Manager

Robert Thorpe – Head of UK Retail Sales

Cazenove equity funds - strong sector relative performance

- 2 -

Fund 1 year 3 years 5 years

% growth Quartile % growth Quartile % growth Quartile

Cazenove UK Smaller Companies Fund 1.2 1st 131.7 1st 27.8 1st Relative to IMA UK Smaller Companies Average 10.3 49.9 26.2

Cazenove UK Opportunities Fund 1.3 1st 63.6 1st 28.1 1st Relative IMA UK All Companies Average 8.4 20.5 27.4

Cazenove UK Equity Income Fund 1.0 1st 43.2 1st 9.8 1st Relative to IMA UK Equity Income Average 3.8 5.9 12.2

Cazenove UK Absolute Target Fund 10.7 1st 2.4 4th – –Relative to IMA Absolute Return Average 11.4 -10.3 -18.5

Cazenove European Fund -15.3 2nd -0.2 4th 0.4 1st Relative to IMA Europe (Ex UK) Average 0.5 -10.4 6.1

Source: Lipper, net income reinvested at 30.12.11

- 3 -Source: Lipper, net income reinvested at 30.12.11

Fund 1 year 3 years 5 years

% growth Quartile % growth Quartile % growth Quartile

Multi-Manager Diversity Fund 0.4 1st 25.2 2nd 20.5 1st

Diversity Income Fund 0.9 1st – – – –

Multi-Manager Diversity Balanced Fund -3.4 1st – – – –

Multi-Manager Diversity Tactical Fund -3.0 1st 20.8 4th 1.9 3rd

Multi-Manager UK Growth Fund -4.0 1st 31.0 4th -4.3 3rd

Multi-Manager Global (ex UK) Fund -5.5 1st 28.9 2nd 18.8 1st

Cazenove multi-manager - performance across the range

- 4 -Source: Lipper, net income reinvested at 30.12.11

FundVolatility

over 5 years

Fund Sector

Multi-Manager Diversity Fund 6.7 8.7

Diversity Income Fund – –

Multi-Manager Diversity Balanced Fund – –

Multi-Manager Diversity Tactical Fund 12.5 14.8

Multi-Manager UK Growth Fund 15.1 18.1

Multi-Manager Global (ex UK) Fund 15.0 17.1

Volatility across the range

- 5 -

Asset allocation views

Strategy fund selection (5,000 funds)

Portfolio construction

Review

Multi-manager team

Marcus Brookes, Robin McDonald, Joe Le Jehan & Tabitha Johnston

42 years’ combined investment experience

Internal resources External resources

Cazenove Capital strategy team

Cazenove Capital fund managers:

- Chris Rice- Peter Harvey- Paul Marriage- Julie Dean

Independentstrategists

External Fund managers

Broker research

Our process in one slide

A portfolio of “good funds” does not necessarily make a good portfolio

Asset allocation and fund selection are interlinked disciplines

– Different “good funds” are required for different market environments

– Need to have a view on the future market environment to select the right “good fund”

- 6 -

What we do for investment research: Philosophy

Example of a review

- 8 -

Case Study: 2008 Fixed Interest

Asset Allocation

– View Gilts were expensive having acted as a safe haven in 2008

– Credit Crisis had impacted corporate bonds too much. Implied defaults showed that Corporate Bonds were expecting 1930’s deflationary depression.

Decision:

Sell Gilts and purchase a corporate bond fund that would benefit from a recovery in credit markets. Remain wary of Financial (Banks) bonds.

- 9 -Source: Lipper, net income reinvested.

Fund Selection: Performance?

Best performing 3 funds (3 years to 31/10/08)

– Schroder All Maturities Corp Bond +2.5%

– S&W Church House IG +1.7%

– Standard Life AAA Income +1.1%

View of these funds

– These were not highest quality teams

– Outperformance was due to being defensive

– They were not positioned for a rally in credit

Decision:

Not suitable from quality perspective and not positioned for our expected scenario of a recovery in credit

Fund Selection Performance?

- 10 -Source: Lipper, net income reinvested.

Worst performing 3 Funds (3 years to 31/10/08)

– Henderson Sterling Bond -21.9%

– Axa Sterling Bond -22.8%

– Old Mutual Corporate Bond -23.6%

View of these funds

– Quality teams apart from Axa

– Underperformance was due to too much exposure to Financials

– Exposure to Financials still large and expected to remain

Decision:

Some good quality teams available but positioning too risky given our view of the risks in Financials.

Fund Selection

- 11 -

Identify Quality funds:

– Previous research favoured:

• Kames (formerly Aegon) Sterling bond

• Old Mutual Corporate Bond

• M&G Corporate Bond

• Invesco Perpetual Corporate Bond

• Henderson (formerly New Star) Sterling bond.

Quantitative Research showed only M&G and Invesco Perpetual were positioned appropriately (modest Financials risk). Interviewed both teams.

Decision: Invest with Invesco Perpetual. (NB: we met all the teams listed above at least once during 2008)

- 12 -Source: Lipper, net income reinvested 31/10/08 to 29/10/10.

Corporate bonds outperform Gilts - Invesco Perpetual is top decile

Percentage growth total return

2011

What has happened 2011? Equities

- 14 -Source: Lipper, net income reinvested 31/12/10 to 30/12/11.

Percentage growth total return

What has happened so far? Sectors

- 15 -Source: Lipper, net income reinvested 31/12/10 to 30/12/11.

Percentage growth total return

What has happened 2011? Fixed Income

- 16 -Source: Lipper, net income reinvested 31/12/10 to 30/12/11.

Percentage growth total return

- 17 -Source: Lipper, net income reinvested 31/12/10 to 30/12/11.

What has happened 2011? Currencies (and Gold)

Percentage growth total return

• A multi-asset, fund of funds in the Cautious Managed sector.

• Diversification through an economic cycle

• We aim to smooth the journey regardless of the investment climate.

• Target CPI +4% p.a. over the medium term*

• TER 1.79%

Cazenove MM Diversity Fund

- 18 -*Not guaranteed.

1/3 Equities

1/3 Fixed Income & Cash

1/3 Alternatives

- Property

- Hedge

- Commodities

Contributors to Performance

• Being defensively positioned helped as markets struggled

Fixed Income and Cash

–Cash in Diversity as high as 22% (now 11%)

–M&G Optimal Income +5.7%

Equities

–Invesco Perpetual Income +8.3% (since sold)

–JO Hambro UK Opportunities +4.3%

–Low exposure to Emerging Markets and Europe (since added to).

Alternatives

–Absolute funds that went up

» Cazenove UK Absolute Target +10.7%

» Majedie Tortoise +8.3%

» The Eclectica Fund +12.2% (31/12/10-30/11/2011)

–Gold (sold)

• Not owning gilts hurt

- 19 -Source: Lipper, Bloomberg and Eclectica

Outlook

21

Economic Activity

Prices

Inflation/Low Growth

Buy: Precious Metals, Oil, Cash

Sell: Financial Assets

Inflation/High Growth

Buy: Commodities, Emerging Markets, Cyclicals

Sell: Bonds, Interest-rate-sensitive Stocks

Deflation/Low Growth

Buy: Government Bonds, Yield

Sell: Equity, Negative Cash Flow Assets

Deflation/High Growth

Buy: Equity, Corporate Debt, Real Estate

Sell: Price & Demand Inelastic Shares

A template for different investment environments

Global Inflation

22Source: Thomson Datastream

-5

0

5

10

15

20

25

2000 2002 2004 2006 2008 2010

Yo

Y %

Ch

an

ge

Headline Food Non-food

Eurozone Inflation US Inflation

UK Inflation China Inflation

Global Composite PMI

23

JPMorgan Global PMIs

0

20

40

60

80

100

120

140

160

180

2007 2008 2009 2010 2011 2012

% G

DP

France Italy Spain Portugal Ireland Greece

Eurozone Debt Crisis

24Source: BIS & Thomson Datastream

Eurozone Government Debt as a % GDP

Eurozone Debt Crisis

25Source: BIS & Thomson Datastream

Eurozone 10 year government bond yield over Bund spreads

Valuation

Historic Non-financial Trend P/Es

27Source: Thomson Datastream

UK Non-financial Historic Trend P/E

US Non-financial Historic Trend P/E

Eurozone Non-financial Historic Trend P/E Japan Non-financial Historic Trend P/E

Earnings Forecasts

28Source: Thomson Datastream

FTSE All Share Earnings Forecasts S&P 500 Earnings Forecasts

FTSE Europe ex-UK Earnings Forecasts

Corporate over Government Bond Yield Spreads

- 29 -Source: Thomson Datastream

UK Corporate Bond Spreads

1. The Diversity Range of funds are Multi-Asset, Multi-Manager strategies.

2. Performance has been strong relative to peers, particularly in risk adjusted terms

3. The fund is positioned defensively• QE1 and QE2 led to temporary growth and higher inflation• Economies have slowed without stimulus• Political backdrop is awful

4. Equity markets have fallen and reflect some of our worries, so we have marginally increased risk taking but there remains significant risk of further weakness.

- 30 -

Summary

Launching April 2012:

Cazenove Portfolio Management Service

6. What options you could offer insteadof validating NBS decisions

A fund and bespoke (DFM) solution

Available across multiple platforms

Cost effective fund solution

6 ATR profiled funds with a proven record

A risk profiling tool

2 key Cazenove propositions

already widely accessible

fund AMC 0.5% p.a.

profiled by Distribution Tech.

available free to all advisers viacazenovecapital.com

Bespoke and fund solutions

- 33 -

Distribution Technology risk profiles

Cazenove Portfolio Management Service: ATR funds

Thank you

This document is issued by Cazenove Capital Management (Cazenove Capital). It is for information purposes only and does not constitute an offer to enter into any contract/agreement nor a solicitation to buy or sell any investment or to provide any services referred to therein.

This document is solely for the use of professional intermediaries and is not for general public distribution.

The contents of this document are based upon sources of information believed to be reliable, however, save to the extent required by applicable law or regulations, no guarantee, warranty or representation (express or implied) is given as to its accuracy or completeness, and Cazenove Capital or connected companies, directors, officers and employees do not accept any liability or responsibility in respect of the information or any recommendations expressed herein which, moreover, are subject to change without notice.

This document has been produced based on Cazenove Capital Management’s research and analysis and represents our house view. Unless otherwise stated all views are those of Cazenove Capital Management. It may not be reproduced in any form without the express permission of Cazenove Capital Management and to the extent that it is passed on, care must be taken to ensure this is in the form which accurately reflects the information given here. Unless otherwise indicated, the source for all data is Cazenove Capital.

Past performance should not be seen as an indication of future performance. The value of investments and the income from them can go down as well as up and an investor may not get back the amount invested and may be affected by fluctuations in markets and exchange rates.

Cazenove Capital Management is the name under which Cazenove Capital Management Limited (registered No. 3017060) and Cazenove Investment Fund Management Limited (registered No. 2134680) each authorised and regulated by the Financial Services Authority and of 12 Moorgate London EC2R 6DA provide investment products and services.

- 35 -

Disclaimer

Diversity Positioning

- 37 -

Tactical views: 1/3 Equities

1/3 EquitiesStrategy• We favour sectors or companies with:

– Stable business model (utilities, staples, healthcare).

– Strong balance sheets

– Reliable dividend yields

– Unloved and under-owned (underperformed).

• We are avoiding

–Companies with dangerous debt levels

– Companies reliant on the economy.

Key Positions

• Fidelity Special Situations (NEW HOLDING)

• JOHCM UK Opportunities

• Neptune European Opportunities

• Findlay Park American

- 38 -

Tactical views: 1/3 Fixed Income & Cash

Strategy

• Corporate Bonds remain favoured

– Good yield

– Lower risk as debt levels have fallen.

• Government Bonds look unattractive

– Inflation rising

– Possible further Quantitative Easing (printing money) around the world

Key Positions

• M&G Optimal Income

• JPM Income Opportunities

• Kames Capital High Yield (NEW HOLDING)

1/3 Fixed Income & Cash

- 39 -

Tactical views: 1/3 Alternatives

1/3 Alternatives Strategy

Low correlation to equity markets

Relative Value strategies

Cautious strategies

Still don’t like property

Key positions

Jupiter Absolute Return

The Eclectica Fund

Majedie Tortoise

ETFS Physical Gold (recently sold but looking to repurchase at lower levels)

Alternatives (29.9%)Jupiter Absolute Return = 8.1%

Cazenove UK Absolute Target = 5.1%

Majedie Tortoise = 4.9%

The Eclectica Fund = 3.6%

Artemis Strategic Assets = 3.1%

ETFS FX Short € Long $ = 2.1%

Odey Continental European = 1.8%

Nevsky = 1.0%

13.5% Defensive Autocall = 0.5%

Equities (29.6%)

JOHCM UK Opportunities = 5.2%

Franklin UK Mid Cap= 4.0%

Investec UK Special Sits = 4.0%

Findlay Park American = 4.0%

Fidelity Special Situations = 3.0%

Cazenove European = 2.9%

Walker Crips UK Growth = 2.1%

Neptune European Opps = 1.9%

GLG Japan Core Alpha USD= 2.5%

- 40 -

MM Diversity– The current portfolio

Fixed Interest & Cash (40.4%)M&G Optimal Income = 10.1% JPM Income Opps = 7.0% Invesco Monthly Income Plus= 4.8%

Invesco Tactical Bond = 3.0% Thames River Global Bond = 2.1% Kames Capital High Yield = 2.1% Cash = 11.3%