Performance Preservation Capital Partners

Reliable Predictive Investment Management

Our Approach

Our methodology is based on multi-factorial financial models incorporating reliable and predictive analysis.

These models can be applied across a range of asset classes.

The initial focus is on Australian Shares.

The model, provides a long term forecast of the future returns of the investment, which are then converted into probabilities. It is these probabilities that are used to develop the trading strategies for each fund.

These trading strategies focus on identifying investment opportunities where we believe that there is significantly more chance of upside than downside. For example:

- where the probability of an investment returning a positive return is greater than say 80%, then this a reasonable investment to buy

- where the probability of an investment returning a positive return is less than say 35%, then this investment should be sold at this time.

Our approach creates a portfolio of these investment opportunities, creating a risk/return profile that aims to achieve the characteristics of Performance and Preservation, over the longer term.

A key difference in our approach is that we are benchmark unaware. As a result our performance will show lower correlation to the various sharemarket indices. This is potentially a major diversification benefit for investors who are seeking alternative investment funds that deliver strong returns with low correlation to the sharemarket indices.

INVESTOR OUTCOMES

“Ideally, we would like to deliver to our investors the best of both worlds, a sharemarket like return in “good” markets, and an absolute return in “bad” markets.”

In practice the funds will aim to deliver a higher % of the market upside and a lower % of the market downside.

This asymmetrical payoff profile objective is a key feature of the various fund strategies run by PPCP.

Our Process

STOCK SELECTION

- comprehensive historical database

- analysis with 70+ factors

- outputs include forecasts and probabilities

- margin of safety used to calculate adjusted forecast return

- final ranking of all stocks


PORTFOLIO CONSTRUCTION

- filter down to 30-50 stocks

- define strategy for fund

- calibrate the strategy

- calculate the overlays

- determine final portfolio weights by applying all the steps above and the adjustments for the forecast return and risk for each stock.


Details on PPCP's process has been documented in the attached Insight.


Two Case Studies showing the high level operation of the above PPCP Stock Selection Process using actual trades in:

- Bendigo Bank, and

- Flight Centre

have been documented in the attached Insights.

Outcome of the PPCP Process

The PPCP Process aims to deliver both Performance and Preservation offering a different risk and return profile that may potentially offer diversification benefits when combined with clients' existing portfolios.

The following table shows the historical performance of the Australian Dynamic Market Long Fund since inception.

Note how this table shows that this fund has captured:

- most of the upside performance in positive index months; and

- less of the downside performance in negative index months.

This highlights the benefit of the PPCP Process and explains how the out-performance has been generated since the inception of the fund.

Further details on this analysis has been documented in the attached Insight


A further piece of analysis looks at PPCP's performance in the volatile period during Q1 2018, and shows how the PPCP process operated during that period.

Performance Preservation Capital Partners Pty Ltd

Reliable Predictive Investment Management

ACN 604 104 510

Authorised representative under Australian Financial Services Licence no. 287730

Sydney Office: Level 21, 6-10 O'Connell Street, Sydney NSW 2000

Phone: +61 2 9098 8887

Melbourne Office: Level 3, 461 Bourke Street, Melbourne VIC 3000

Phone: + 61 3 9654 3522

Website: www.ppcpartners.com.au

This document has been prepared by Performance Preservation Capital Partners (PPCP) ACN 604 104 510, AFSL No 287730. It is general information only and is not intended to provide you with personal financial advice or take into account your personal objectives, financial situation or needs. You should consider, with your financial adviser, whether the information is suitable for your circumstances. To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information. The IM for the relevant fund issued by PPCP, should be considered before deciding whether to invest in that fund. The IM can be obtained from PPCP. PPCP does not guarantee the performance of any fund or the return of any investor's capital. The total return shown for each fund has been calculated using exit prices before taking into account any ongoing fees and assuming reinvestment of distributions. No allowance has been made for taxation. Past performance is not an indication of future performance.