Investment Manager:

Piraeus Bank (Cyprus) Ltd.

(February 2013)


How has the WSP Global Strategy Risk 10% Portfolio performed recently compared to its peers and are there any particular stocks or areas where it is performing well?

Our year-to-date net performance, up to the end of November, was close to +1.2% in EUR, similar to the performance of the Fund’s peers. Markets, both equity and bonds, were extremely volatile all through 2012 with a number of rallies and corrections over short time periods. Given the 10% volatility target we have relative to our peers, we are very happy with our current performance. Underlying equity funds with exposure to Africa, South East Asia and India, and the Emerging Markets Bond Fund performed particularly well in the year in terms of absolute returns and returns relative to their volatility.

According to recent reports, funds of funds have had a relatively good year in 2012. Why do you think they have proved more popular than some other types of funds?

Funds of funds offer unique opportunities to retail investors. By investing in a fund of funds an investor’s investment is diversified in terms of regions, managers and asset classes. In addition, funds of funds can invest in funds run by managers that retail investors usually do not have access to. For example, local fund managers in frontier or developing markets who have better knowledge of and access to data relating to local companies, and, equally importantly, personal experience of other crucial issues, such as political stability, in those countries.

In 2012 the performance of global markets was driven largely by continuing problems in the Eurozone and the persistent sluggish nature of the global economy. Do you expect these two factors to remain significant market drivers in 2013?

We believe that there is a correlation between the two factors. One of the major reasons for the persistent sluggish global economy is the Eurozone’s problems. We expect Eurozone problems to continue to affect global markets negatively for most of 2013. Positively, though, it can be seen that EU leaders are determined to take necessary action to ensure the EU comes out of the crisis stronger. We expect this new, stronger EU structure to start taking shape towards the end of 2013 and early 2014.

What other factors, if any, are you expecting to influence markets in 2013?

One major factor will be the way the Syria problem is resolved and the impact on Middle East political stability in general and the effect on the price of oil. We are hoping for a peaceful resolution to the issue but we expect that it will be a volatile period with the involvement of many countries. A bad scenario for global markets would be if the situation in Syria gets out of control as the consequences of such a situation are impossible to foresee.

What is your view on further monetary easing by world central banks? Is it likely to help the world economy or are its effects becoming increasingly limited?

Monetary easing by central banks is what has kept the global economy out of a prolonged recession. We are in favour of more monetary easing and we believe that it will have a strong positive impact on economies. We expect this positive impact to be greater and more notable in the medium term rather than the short term.

How do you expect equities and bonds to perform this year relative to each other and why? Are you expecting one to significantly outperform the other?

We expect a positive performance from both equities and bonds over 2013 with equities outperforming bonds. During 2013, especially towards the end of 2013, equities and bonds will start to discount the prospects of a stronger EU (due to the more robust and uniform financial structure to be put in place) and the positive impact on other global economies.

Are there any regions you feel will do particularly well this year and why?

We expect Europe to outperform over 2013 as it is currently undervalued compared to other regions but is at the same time quickly gathering positive momentum. Other regions we view positively are Latin America - especially as the 2014 World Cup in Brazil is approaching - and South East Asia because its strong fundamentals should be reflected on equity markets.

Regardless of what regions may or may not do well, economic growth is unlikely to be extremely strong anywhere this year. In low-growth environments, what investment strategies are likely to bring the best returns?

A conventional investment strategy which identifies and invests in undervalued economies and sectors has been proven to, over time, deliver good performance during periods of low growth. This strategy puts more weight on the skill and vision of the manager and his/her ability to identify undervalued economies and sectors not only in terms of fundamentals but also in terms of future potential. As well as this, some unconventional hedge fund strategies may produce positive returns irrespective of the economic and financial environment but extra care needs to be taken with regard to risk management and especially concentrated tail risk.

Markets again seemed to be driven more by sentiment than fundamentals in 2012. Do you think this has left a lot of good opportunities in the form of undervalued stocks?

Stocks become undervalued because of negative sentiment and overvalued because of positive sentiment among investors. 2012 was a very sentiment year and has left a large number of undervalued and overvalued stocks out there!

Bearing all these factors in mind, how are you planning to position the Fund portfolio in the coming months?

Given our 10% volatility target, we will continue to maintain a balanced allocation with exposure to equities, bonds and cash. Within our equity allocation we will maintain exposure to a wide range of markets including Latin America, South East Asia, Europe, India and Africa.


IMPORTANT NOTE: This report has been prepared for information only, and it does not represent an offer to purchase or subscribe to shares. World Strategy Portfolios (“WSP”) is registered on the official list of collective investment undertakings pursuant to part I of the Luxembourg law of 20th December 2002 on collective investment undertakings as an open-ended investment company. WSP believes that the information is correct at the date of production while obtained from carefully selected sources considered to be reliable. No warranty or representation is given to this effect and no liability can be assumed for the correctness or accuracy of the given information which may be subject to change at any time, without notice. Past performance provides neither a guarantee, nor an indication of future performance. Value of the shares and return they generate can fall as well as rise. Currency fluctuations, either up or down, may also affect value of the investment. Due to continuing market volatility and exchange rate fluctuations, the performance may be subject to significant changes over a short-term period. Investors should be aware that shares in the financial instruments entail investment risks, including the possible loss of the invested capital. Performance is usually calculated on the basis of the relevant NAV unless stated otherwise. Performance shown does not take account of any fees and costs associated with subscribing or redeeming shares. It is assumed that all dividends were reinvested. WSP prospectus is available and may be obtained through www.1cornhill.com. Before investing in any WSP Sub-fund(s) investors should contact their financial adviser / legal adviser / tax adviser and refer to all relevant documents relating to the WSP and its particular Sub-fund(s), such as the latest annual report and prospectus that specify the particular risks associated with the Sub-fund, together with any specific restrictions applying, and the basis of dealing. In the event investors choose not to seek advice from a financial adviser / legal adviser / tax adviser, they should consider whether the WSP is a suitable investment for them.