PRUDENTIAL INVESTMENT MANAGERS

MICHAEL MOYLE – HEAD OF MULTI-ASSET

8 JUNE 2017

Slide 2

GLOBAL REACH IN ASSET MANAGEMENT

Prudential PLC

US Life

Insurance

US Asset

Management

UK Life

Insurance

Asia Life

Insurance

Asia Asset

Management

Prudential SA works closely with the

Prudential Group’s asset management

companies around the world

Worldwide, the Prudential Group

has a total of £562 billion of funds

under management

More than 450 investment

professionals in global asset

management teams

49,99%

South African

Investment

Management

Thesele

Group

22.00%

Prudential

Staff

28.01%

UK Asset

Management

49.99%

Slide 3

INVESTMENT PHILOSOPHY

CONSISTENT PHILOSOPHY & PROCESS SINCE INCEPTION

Construct

portfolios on a risk

conscious basis

Use long run

anchors of where

assets should be

priced

Focus on the long

term and seek to

ignore short term

“noise”

PrudentValuation Based Long-term

Slide 4

Try to ignore most of our own views

• Adopt a “normal distribution” approach of forecasting

Exploit behavioural biases – Episodes

• Valuation (represents biased perception of risk)

• View formation (represents biased formation of beliefs)

Exploit gravity in risk pricing relationships

• Rubber-band theory: the further valuation moves from fair value, the more likely and

severe a re-pricing becomes

Approach is unconventional and

slightly counter-intuitive

• We are reactive and opportunistic

WE AIM TO BE BETTER AT UNDERSTANDING THE

ODDS ON OFFER

Slide 5

THE FOLLY OF FORECASTINGRand/$ forecasts have not proven to be particularly useful

Source: Reuters & Prudential Investment Managers

Rand/$ forecastRand/$

Slide 6

EXPLOIT BEHAVIOURAL BIASES – EPISODES

Source: IRESS

6,00

6,50

7,00

7,50

8,00

8,50

9,00

9,50

10,00

10,50

11,00

Jan

-10

Ju

l-1

0

Jan

-11

Ju

l-1

1

Jan

-12

Ju

l-1

2

Jan

-13

Ju

l-1

3

Jan

-14

Ju

l-1

4

Jan

-15

Ju

l-1

5

Jan

-16

Ju

l-1

6

Jan

-17

SA 10y Government Bond Yield

Ove

rso

ldO

ve

rbo

ug

ht

“Nenegate”

14-Dec-16; 2,75

14-Dec-15; 3,53

Fair Value; 2,25

-

0,50

1,00

1,50

2,00

2,50

3,00

3,50

4,00

4,50

5,00

Government Bonds

Prospective Real Yields

Slide 7

SA FAIR VALUES AND RISK PREMIA

Source: Prudential Investment Managers

Slide 8

REAL RETURNS

Source: Bloomberg, Reuters, Credit Suisse, Prudential Investment Managers 04.05.2017

Slide 9

PRUDENTIAL BALANCED FUNDAsset allocation – 30 April 2017

EQUITYLISTED

PROPERTY

OFFSHORE

(EXCL. AFRICA)

AFRICA

(EXCL. SA)

Intended Maximum Limits 75% 25% 25% 5%

Total Equity 62.9%

Total Foreign 26.2%

*Note: Cash includes Floating Rate Notes

Slide 10

PRUDENTIAL BALANCED FUNDPerformance (after fees) since inception to 30 April 2017

Source: Morningstar

Investment

Objectives

1. Target: Deliver capital growth over the medium to long term.

2. Benchmark: The average return of the ASISA South African – Multi Asset – High Equity Category

Slide 11

PRUDENTIAL BALANCED FUNDQuarterly performance vs bonds and equities

Source: Prudential Investment Managers

-20,0%

-15,0%

-10,0%

-5,0%

0,0%

5,0%

10,0%

15,0%

20,0%

Q499

Q200

Q400

Q201

Q401

Q202

Q402

Q203

Q403

Q204

Q404

Q205

Q405

Q206

Q406

Q207

Q407

Q208

Q408

Q209

Q409

Q210

Q410

Q211

Q411

Q212

Q412

Q213

Q413

Q214

Q414

Q215

Q415

Q216

Q416

Prudential Balanced Fund Equity Bonds

Monthly returns: Fund Equity Bonds

Return (annualised) 16.1% 15.8% 14.2%

Standard Deviation (annualised) 10.8% 16.7% 7.1%

Slide 12

PRUDENTIAL BALANCED FUNDConsistency has been a key feature of our performance

Source: Morningstar Direct as at 30.04.2017, 2007-2016 three year return to calendar year end, 2017 three year return to 30.04.2017

Morningstar

Rating

Average Balanced

Fund Return

1ST

2ND

3RD

4TH

Slide 13

PRUDENTIAL INVESTMENT MANAGERS

WE DON’T TRY TO OUT-FORECAST OUR COMPETITORS, WE TRY TO BE BETTER AT INTERPRETING

KNOWN FACTS

• To have a holy grail from superior insights

• To have forecasting superiority

• To employ a “smarter” team than the competition

• To understanding the nature of the markets in which we invest

• To take advantage of price movements and value opportunities

• To invest for the long term

• To be consistent in our approach

We do claim…We don’t claim…

THANK YOU

Slide 15

Michael Moyle is Head of Multi-Asset at Prudential Investment

Managers, with 19 years’ experience. He is co-Portfolio Manager

of four Prudential unit trust funds, and has won several Raging Bull

and Morningstar Awards. He also chairs the Prudential Asset

Allocation Committee.

Michael’s qualifications include: Masters in Engineering Mechanics

(University of Texas); MBA (UCT); and CFA.

MICHAEL MOYLEHead of Multi-Asset

This document is for information purposes only and is not an offer or a solicitation to invest in any of the

capabilities or products offered by Prudential Investment Managers (South Africa) (Pty) Ltd (‘Prudential’) or any

of its associates, being Prudential Portfolio Managers SA Life Ltd or Prudential Unit Trusts Ltd. Prudential is

authorised and registered as a discretionary financial services provider by the Financial Services Board of

South Africa [FSP 45199], in terms of the Financial Advisory and Intermediary Services Act. The company’s

offices are located at: 5th Floor Protea Place, 40 Dreyer Street, Claremont, 7708. Information in this document

has been obtained from sources believed to be accurate and timely, but Prudential makes no representation or

warranty, express or implied, with respect to the correctness, accuracy or completeness of the information and

opinions provided therein. This information is not intended to constitute a basis for any specific investment

decision. Investors are advised to familiarise themselves with the unique risks related to their investment

choices, and should seek the advice of a qualified financial adviser before investing. The value of an

investment will fluctuate and past performance is not necessarily an indication of future returns.

DISCLOSURE STATEMENT