The Manager is expected to add value through a number of factors which include their combined skill in preserving capital while taking advantage of strong growth in Asian equity markets. OCTIS uses a combination of three strategies to achieve its low volatility objective: Asian Equity, Asian Volatility and a Qualitative Overlay.

• The Asian Equity strategy is designed to capture alpha based on quantitative models that mix fundamental and technical factors.
• The Asian Volatility strategy exposes the portfolio to volatility and credit exposures through Asian convertible
  bonds and large regional indexes and is primarily conducted by maintaining delta neutral positions.
• The Qualitative Overlay strategy aims to neutralise non-Asian risks and hedge against world market correlation using currencies, bonds, global stock indexes and volatility instruments.

These strategies are complementary in terms of being either negatively or lowly correlated to each other in all market environments.

OCTIS was founded by Jerome Ferracci, CEO and Derivatives Portfolio Manager in July 2007. The Manager currently employs six full time employees based in Singapore. In July 2012, Treasury Group (ASX:TRG) purchased a 20% stake in the company which Zenith believes adds considerable strength to the business, with the remainder of the company owned directly and indirectly by Ferracci. We consider this a positive step forward for OCTIS given that Treasury Group will provide business support services to the company.

The investment team of three is spearheaded by Ferracci, an investment professional veteran in trading equity and equity derivatives. The Fund’s multi-strategy approach also involves an additional two portfolio managers, Joel Guglietta – Macro-Micro Analyst, and Wu Yuan – Quantitative Equity Portfolio Manager. The three portfolio managers have 40 years of combined investment experience and are backed up by an IT and platform development specialist in derivatives.

Zenith’s View
Zenith considers the team highly experienced in their field and are capable of managing a multi-strategy portfolio. The Manager is very risk aware and their adopted approach to risk management is consistent with their objective to manage a Fund with low volatility. We believe that such a risk-aware attitude adopted and ingrained in their investment philosophy is more likely to be applied consistently across all processes on both an investment and operations level.

Zenith’s conclusion is that the Fund offers a reasonably attractive risk / return profile coupled with a strong focus on capital preservation. The product will suit investors that are seeking a diversified exposure to Asian equities and will blend well with a portfolio that currently does not have any exposure to this region. The Fund’s focus is to produce capital growth over the long term and therefore Zenith recommends that investors adopt a 5+ year investment time horizon.

Zenith rates the Fund Recommended.

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