galloway capital

CAPITAL June 2011

INVESTMENT CASE

Identify the best investment opportunities in the Emerging

and Frontier Markets, providing clients non-leveraged

equity-like returns with fixed income seniority within a

company’s capital structure

OPPORTUNITY

3

Current Scenario

●High growth expectation for the Emerging Markets

●Tendency for the developed economies to maintain its low fixed income rates

●Constantly growing overseas interest in Emerging Markets assets

●Well-managed Emerging Market companies solidified their balance sheets and are gaining access to capital

MARKET PROFILE

4

OPPORTUNITY INVESTING IN EMERGING MARKETS HIGH YIELD

Emerging Markets and Advanced Economies GDP Growth

Source: Bloomberg / Dec 2010

0%

100%

200%

300%

400%

500%

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10

GDP Current USD Emerging Markets

GDP Current USD Developed Economies

5

OPPORTUNITY INVESTING IN EMERGING MARKETS HIGH YIELD

EM High Yield, US High Yield and US Equities accumulated return over the last 10 years

6

Source: Bloomberg / Mar 2011

-50%

-25%

0%

25%

50%

75%

100%

125%

dez-01 out-02 ago-03 jun-04 abr-05 fev-06 dez-06 out-07 ago-08 jun-09 abr-10 fev-11

S&P 500 Index

CS EM Corp Bonds Index

iBoxx USD Liquid HY Index

16% 11% 9%

17%

77%

118%

0%

20%

40%

60%

80%

100%

120%

140%

SPX IBOXHY CEMBTOTR

Vol (Std. Dev.) Acum. Return

●Emerging Markets countries in general have higher expected growth rates with often lower leverage when compared to Developed Markets

●Selective Emerging Markets countries still show gaps between its current ratings and their macroeconomic reality providing opportunities to obtain higher returns when upgrades occur

INVESTING IN EMERGING MARKETS SOVEREIGN

OPPORTUNITY

7

INVESTING IN EMERGING MARKET BONDS

OPPORTUNITY

● The Emerging Markets Debt market is dominated by Large Institutional Funds and Private Banks

● Large institutional funds also tend to focus on Emerging Markets High Grade credits due to issue size and liquidity

● Private Banks will mostly offer clients obvious Emerging Markets High Grade names which the bank supports and that the client feels comfortable with

Lack of reach from the larger players often forces the Emerging Markets High Yield asset class to provide investors higher yields, even beyond its implicit risks

8

THE FUND

GALLOWAY GLOBAL EMERGING MARKETS FIXED INCOME FUND

●Fixed Income long-only fund specialized in both Emerging Markets Corporate and Sovereign Credit Bonds

●The Fund aims for consistent risk-adjusted

returns by focusing on Global Emerging Markets

● Multi-approach Due Diligence

●Highly diversified strategy

● No Leverage, No Hedging and No use of Derivatives

● Fully Invested

10

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC YTD Since Inception

2009 1.47% 0.31% 4.21% 4.95% 6.50% 1.65% 1.94% 1.20% 24.33% 24.33%

2010 1.72% 1.44% 3.48% 1.12% -3.32% 0.64% 3.90% 0.35% 3.61% 3.22% 0.32% 1.19% 18.91% 47.84%

2011 1.87% 0.86% 0.90% 1.27% -0,02% 4.97% 55.19%

Historical Performance


11

0%

10%

20%

30%

40%

50%

60%

06-0

9

07-0

9

08-0

9

09-0

9

10-0

9

11-0

9

12-0

9

01-1

0

02-1

0

03-1

0

04-1

0

05-1

0

06-1

0

07-1

0

08-1

0

09-1

0

10-1

0

11-1

0

12-1

0

01-1

1

02-1

1

03-1

1

04-1

1

05-1

1

Galloway GEM FI Fund CS EM Corp Bond Index

23.48%

6.75%

18.97%

5.53%

Annualized Return Vol (Std. Dev.)

Galloway GEM FI Fund

CS EM Corp Bonds Index


12

Chile

Uruguay

Nigeria

Turkey

Poland

Ivory Coast

Belarus

Oman

Indonesia

China

Kazakhstan

Mexico

Colombia

Ukraine

Cash

Argentina

Brazil

0% 5% 10% 15% 20% 25% 30% 35%

Country Breakdown

Number of Positions:

Yield To Worst (%):

Duration:

Average Rating:

36

10.06

4,23

B

90.1%

4.3% 5.6%

USD

Brazilian Real

Argentine Peso

Currency Breakdown


13

0

5

10

15

20

25

30

35

40

45

50

May

-09

Jun-

09

Jul-0

9

Aug

-09

Sep

-09

Oct

-09

Nov

-09

Dec

-09

Jan-

10

Feb

-10

Mar

-10

Apr

-10

May

-10

Jun-

10

Jul-1

0

Aug

-10

Sep

-10

Oct

-10

Nov

-10

Dec

-10

Jan-

11

Feb

-11

Mar

-11

Apr

-11

May

-11

Assets Under Management (USD million)

Galloway Global Emerging Markets FI Fund

INVESTMENT PROCESS GENERATION OF INVESTMENT IDEAS

● Experienced investment team focused on Emerging Markets: over 50 years of EM experience combined

● Proprietary Research: In depth analysis of opportunities through company visits, calls and meetings with companies’ top management

● Sell Side & Buy Side Research: Wide network of relationships with over 350 counterparties around the world (Investment Funds, Family Offices, Brokers, Banks, etc.) providing a deeper level of information and access to local expertise

14

INVESTMENT PROCESS PORTFOLIO CONSTRUCTION

●Committee’s based investment decisions:

• Monthly: Strategy and Risk Management Committees

• Weekly: Investment Committee

● Daily Meetings to discuss investment opportunities

● Dynamic process of monitoring the portfolio and opportunities through the constant reassessment of the positions

●Replacing good ideas with better ideas. We change a position when we find a bond with:

• The same risk and a higher yield

• The same yield and a lower risk

15

●High Diversification:

• Average Number of Positions: 30 – 50

• Average Position Size: 2% – 3%

●Technological tools and a large network of liquidity providers (over 350 counterparties) to enter and exit positions at the best available prices

INVESTMENT PROCESS PORTFOLIO CONSTRUCTION

16

There is always a reason why a given company is paying an above average market return.

To assert why, and reach conviction to invest, we first have to understand:

It is paramount for companies and/or sovereign issues to be in

countries that have a positive growth outlook or are in a turning

point

Companies have to be aligned with local

governments

Thoughtful analysis to understand the sector’s importance to the

country (subsidies, government support, etc); and its relative value

to global peers

1. COUNTRY MACRO

ECONOMIC OUTLOOK

2. GEOPOLITICS 3. SECTOR

INVESTMENT PROCESS MULTI-APPROACH DUE DILLIGENCE

17

Company/Country’s leverage, its cash flow and ownership

structure

Company and/or country have to be checked through

our local network of contacts (sell and buy side)

Careful selection of entry and exit points, new issuance outlook and relative value

4. CREDIT METRICS 5. LOCAL NETWORK 6.TECHNICAL ANALYSIS

INVESTMENT PROCESS MULTI-APPROACH DUE DILLIGENCE

18

7. GOLDEN RULE: It is fundamental that the cost of a company/country not paying its obligations be “higher” than if it pays.

● Limit of 40% for Brazil, Russia, India or China ● Limit of 20% for other countries

Country Risk

● Limit of 30% for any other currency than USD ● Non USD Bonds must settle via Euroclear / Cedel

Currency Risk

● Limit of 5% per individual corporate credit at cost ● Limit of 20% per individual Sovereign Bond at cost

Corporate Risk

Limit of 20% in less liquid bonds

All Bonds must be Euroclearable/ DTC/ Clearstream

(Issues size below USD 100 Million)

RISK MANAGEMENT

19

Easy access to Portfolio Management team and current portfolio ideas

Portfolio positions and trading history disclosure upon client’s request

TRANSPARENCY FULL DISCLOSURE

20

THE MANAGER

THE MANAGER

Galloway Capital is a Global Emerging Markets investment boutique exclusively focused on active Fixed Income High Yield strategies

With a solid and extensive research approach and a performance-driven investment style, our team aims to identify the most interesting opportunities around the world to provide equity-like returns with fixed income risk

Between the 4 main partners, Nathan Shor, Guillermo Bauder, Ulisses De Oliveira and Roger Braun, Galloway Capital has over 50 years combined of careers dedicated to Credit including: Trading, Sales, Origination, Due Diligence and Execution

22

INVESTMENT COMMITTEE Nathan Shor

Guillermo Bauder Ulisses de Oliveira

PORTFOLIO MANAGEMENT

Ulisses de Oliveira

RESEARCH Roger Braun

RISK MANAGEMENT

João Ferrari

SALES & PRODUCTS Andre Simon

COMPLIANCE Arie Milner

OPERATIONS Tathiana Raso

TRADING Joao Paulo

Vicente

ASSET MANAGEMENT STRUCTURE

23

INVESTMENT TEAM

Nathan Shor

Nathan holds a BSBA from Boston University (Boston, USA) and a Masters degree in Finance from IESA (Instituto Estudios Superiores de Administracion, Caracas, Venezuela). In 1998 he worked at The Nash Fund being responsible for its US equities, Forex and Fixed Income allocations. In 2003, he joined forces with Convenção a Brazilian Broker Dealer to develop their international division offering Futures, Commodities, US Equities and International Fixed Income to Institutional clients. The relationship with Convenção resulted in a new company called Galloway Emerging Markets In 2009, he was responsible to start up the Galloway Global Emerging Markets Fixed Income Fund.

Guillermo Bauder

Guillermo studied business in the UNIMET (Universidad Metropolitana in Caracas-Venezuela). He began his career at Confimerca, the broker dealer of Grupo Confinanzas in 1993. Starting as a floor broker in the Caracas Stock Exchange, he was later transferred to the Local Fixed Income Area and finally ended at the International Fixed Income Area. In 1998 was a Foreign Associate in Peru for North American Institutional Brokers covering US Equity institutional clients. In 2000 joined FTC Securities as Foreign Associate for Latin America, in charge of developing US Equity and Fixed Income for institutional clients. In 2003 he joined forces with Convenção a Brazilian Broker Dealer to develop their international division offering Futures, Commodities, US Equities and International Fixed Income to Institutional clients. The relationship with Convenção resulted in a new company called Galloway Emerging Markets. In 2009, he was responsible to start up the Galloway Global Emerging Markets Fixed Income Fund.

Ulisses de Oliveira

Bachelor of Science in Finance and International Business of NEW YORK UNIVERSITY, certified Series 7 and 66 registered, FSA Rules an Regulations, Securities and Derivatives registered. He began his career in 1996 at then commodity house E D & F Man. Later he joined Safra Bank of NY as Assistant Treasurer until 2000 when he joined Citigroup NY as a Relationship Officer, later he was Vice President of Investments responsible for research, originating and marketing investment ideas directly to clients on a wide range of asset classes: emerging markets and G-7 fixed income, equities, options, and structured products. At the beginning of 2009 he joined Galloway to be responsible for managing its Emerging Markets bond funds.

24

RESEARCH TEAM Roger Braun – Head of Research Roger Braun Barends is a partner at Galloway where he works as Head of Research and New Transactions. Roger has large experience in the credit analysis of companies since he has acted as a corporate finance banker in various industry sectors in special the commodity sector incl. agribusiness. In the past 2 years he acted as a financial advisor for foreign funds (Texel Capital & DZB) developing investment opportunities in Brazil. He started his career as auditor with Coopers & Lybrand and after joining the finance department of Ralston Puring Canada, where he developed feasibility studies for clients to expand their livestock business, entered the banking market. Roger acted for the last 15 years in the Brazilian market where he worked for BNP Paribas, HVB, Calyon and Natixis in leadership positions focused in Project Finance, ECA and Structured Trade & Commodity Finance- STCF in Petrochemicals, Energy, Pulp & Paper, Metals & Mining and Soft commodities. In these last institutions, he was involved in financing the largest Brazilian corporates such as Riopolimeros, CVRD, Petrobras, Ipiranga, Aracruz, Votorantim and Cosan. When working as financial advisor he focused on funding the middle sized companies of the soft & hard commodity business. Roger has a degree in Business Administration from Vienna University and a European Masters of Business Science from Heriot-Watt University and is member of the Brazilian Capital Markets Institute “APIMEC” since 1998.

João Ferrari – Senior Research Analyst Graduated in Business Administration from Fundação Getúlio Vargas in São Paulo and has a Master’s degree in economy from Pontifícia Universidade Católica of São Paulo. He started his career in finance as a credit analyst at HSBC and has also worked for Saint George Bank in the Personal Customer Division. In 2004 he joined Daycoval Asset Management, where he participated in the management of Fixed Income and Variable Income Funds until 2006. Still in 2006 he joined Galloway in the capacity of analyst.

Ricardo Pereira – Research Analyst Holds a bachelors degree in business finance from Suffolk University in Boston. He graduated in May of 2010 with honors. In June he started an internship at Barclays Wealth in New York, where he supported different sales teams. After Barclays he went on to do an internship at a family office where he spent seven months working as an Equity analyst. Ricardo then joined Galloway in May 2011.

25

Giuliano Amaral – Research Analyst Graduated in Business Administration from Fundação Getúlio Vargas in São Paulo in 2009. He started an internship at Moody’s Investors Service in July 2008, where he spent 18 months supporting analysts covering various industries within the Corporate Finance Group. In December 2009, he joined the Structured Finance Group as an Associate Analyst, focusing in ABS backed by several asset classes such as auto loans, consumer loans and mortgages. Giuliano joined Galloway Capital in May 2011 as a research analyst.

SALES TEAM

Andre Simon – Head of Sales

With a Bachelor degree in Business Administration and graduation in Marketing and Publicity from Fundação Armando Alvares Penteado (FAAP), Andre has been working in the asset management industry since 1998. He started his career at BCN Alliance, a joint venture between Alliance Bernstein and Banco BCN, as a sales manager. In 2001, became an associate wholesaler at Alliance Bernstein, distributing offshore funds to Latin American investors. Later in 2004, Andre joined Santander Asset Management as a Sales Manager to start its third-party distribution channel. Was hired in 2007 by Unibanco Asset Management (later Itau Asset Management) to develop the International Distribution channel providing Brazilian investment solutions to investment companies around the world. Joined Galloway Capital in 2010 as Global Head of Sales.

Alexandre M. Preuss – Sales Manager

Holds a master degree in Finance from BBS ( Brazilian Business School) and also graduated in Engineering from Escola de Engenharia Mauá. He started his career in finance in 2003 as an investment advisor at Banco Santander where he later led the structuring of the Wealth Management business. In 2007 he was invited to join GAP Asset Management to develop sales at the Sao Paulo office. He joined Galloway in 2009 as a sales manager.

Lorraine Hac – Sales Manager

Holding a master degree in Business Management (option Finance) from HEC – University of Liege (Belgium), she started her career in Finance as part of the Sales Team of the investment banking arm of Emirates National Bank of Dubai, placing equity and debt capital market primary offerings to the market. She joined Galloway in 2010 as a research analyst later becoming sales manager.

26

OTHER KEY PERSONEL

Arie Milner – Chief Operating Officer and Head of Compliance

Graduated in Civil Engineering from Escola de Engenharia Mauá in São Paulo. He started his career in 1991 working with constructions business until 2001, acting as a partner in several projects. In 2002 he joined the technology markets as a commercial consultant acting in many sectors as energy systems, security and IT solutions (hardware and software).He came to Galloway in 2010 being responsible for administrative department, evolving IT infrastructure, telephony, marketing and utilities.

Tathiana Raso – Head of Operations

Graduated in Business Administration from Universidade Paulista in São Paulo. She began her career in 1998 at Credit Suisse Investment Bank working with Operations in the back office. She came to Galloway in 2007 being responsible for the back office department.

27

João Vicente – Head of Trading

Graduated in Business Administration and Marketing from Escola Superior de Propaganda e Marketing, Joao Paulo began his career in the advisory area of Unibanco Asset Management in 2001. He joined Galloway Capital in 2006 and is responsible for the Trading department.

APPENDICES

FUNDS MAIN CHARACTERISTICS

Galloway Global Emerging Markets Fixed Income Fund

Galloway LatAm Fixed Income Fund

Galloway Brazil Fixed Income Fund

NAV Liquidity Monthly Monthly Monthly

Minimum Initial Investment USD 100,000 USD 100,000 USD 100,000

Additional Investment USD 25,000 USD 25,000 USD 25,000

Redemption 30 days after upcoming NAV 30 days after upcoming NAV 30 days after upcoming NAV

Management Fee 1.5 % per year 1 % per year 0.5 % per year

Performance Fee 15% quarterly on a HWM basis 10% quarterly on a HWM basis 10% quarterly on a HWM basis

ISIN Code VGG3723N1024 VGG3723N1362 VGG3723N1446

Administrator IFCE Fund Services IFCE Fund Services IFCE Fund Services

Custodian IFCE / Pershing IFCE / Pershing IFCE / Pershing

Auditor Ernst & Young Ernst & Young Ernst & Young

29

This presentation has been prepared by Galloway Capital. This presentation is provided for informational purposes only and does not constitute or should not be construed as an offer to buy or sell or solicitation of an offer to buy or sell any financial instrument or to participate in any particular trading strategy in any jurisdiction. The information herein is believed to be reliable as of the date in which this material was issued and has been obtained from public sources believed to be reliable. Galloway Capital does not make any representation or warranty, express or implied, as to the completeness, reliability or accuracy of such information, nor is this presentation intended to be a complete statement or summary of the securities, markets or developments referred to herein. Opinions, estimates, and projections expressed herein constitute the current judgment of the analyst responsible for the substance of this presentation as of the date in which it was issued and are therefore subject to change without notice. Prices and availability of financial instruments are indicative only and subject to change without notice. The financial instruments discussed in this presentation may not be suitable for all investors, and it does not take into account the investment objectives, financial situation or particular needs of any particular investor. Investors should obtain independent financial advice based on their own particular circumstances before making an investment decision on the basis of the information contained herein and it is strongly recommended that investors read carefully the disclosure document of the funds presented herein before making an investment decision. Foreign investments may involve greater risk than domestic investments. If a financial instrument is denominated in a currency other than an investor’s currency, a change in exchange rates may adversely affect the price or value of, or the income derived from, the financial instrument, and the reader of this presentation assumes any currency risk. Income from financial instruments may vary and its price or value, either directly or indirectly, may rise or fall. Past performance is not necessarily indicative of future results, and no representation or warranty, express or implied, is made herein regarding future performances. Galloway Capital does not accept any liability whatsoever for any direct or consequential loss arising from any use of this presentation or its content. This presentation may not be reproduced or redistributed to any other person, in whole or in part, for any purpose, without the prior written consent of Galloway Capital. Additional information relative to the financial products discussed in this presentation

LEGAL INFORMATION

30

CONTACT INFORMATION

+55 11 4082-2250

[email protected]

www.gallowaycapital.com

galloway capital

Documents