basic investment principles

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BASIC INVESTMENT PRINCIPLES

MARCH 2014Presentation at the Nigerian Stock Exchange Investors Clinic for Registered Shareholders AssociationsINVESTMENT BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING

1INVESTMENT BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING Peculiarities of Financial ProductsThe Investment ProcessWhy you need an Investment Advisor?Understanding YOURSELF as an investorOutline

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UBA Capital Group The One-Stop Shop for your Financial NeedProducts and ServicesInvestnow.com.ng2

Understanding YOURSELF as an investor - The Age Factor The age factor in investing it helps to define who you are

The young generation can accommodate more risk

The middle age category has a balanced risk appetite

Old investors should be discouraged from taking excess risk

Even within asset classes, consider age in selecting specific asset20s30s-40s40s-50s60s+

Wealth accumulation stage

Split savings into long- and short-term goals

Think equities for long-term; liquid assets for short-term

Growth is the targetConsolidation stage

Preparing for retirement

Less appetite for risk, strong appetite for physical assets like real estate

Increasing preference for incomeA fulfilled retirement

Very low risk appetite

Less energy

Focus on stable income

Fixed income products and realty are often the attractionA Starter

Strong appetite and natural headroom for high risk

Alternative income sources

Less need for liquidity from investment

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Set clear Investment Objectives - This should include time horizon - Consider your liquidity needs - Risk tolerance and other constraints - Tax considerations etc

Determine your Asset Allocation - The principle of diversification is crucial - Balance your risk with return expectation - Within each asset, also diversify

Minimize transaction cost - Only buy and sell when necessary - Ensure best execution - Mutual Funds/ETFs minimize cost

Be Disciplined - Focus on your objective - Ignore short term noises - Rebalance portfolios - Restructure when necessary - Do not be part of the herd - Reset objectives if need be

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The Four Cardinal Principles of InvestingUnderstanding YOURSELF as an investor - Investing4INVESTMENT BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING

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Peculiarities of Financial Products - Asset ClassesDiversification from purely financial instrumentsA good hedge against inflationComponents of both long term capital appreciation and current return in form of rental incomeModerate risk investment

Steady income from coupon paymentsIncome also earned from capital appreciationTraded OTCLow risk investments

Money MarketOn a steady recovery path in 2012Historically, has outperformed all other investment vehicles in the long runGood hedge against inflation Moderate riskReliable source of income Flexible choice amongst quality, maturity dates, returnsLiquidityLow risk investments

BondsEquitiesReal EstatePrivate EquityAdditional diversification opportunity to portfolioCommodities offer best hedge against inflationPrivate equity provide market-independent (absolute) returns on investmentLock-in periods (investment horizon) for private equity could be highHigh risk investmenrtsINVESTMENT BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING Lets think about the risk of financial productsWhat are the risk factors that may reduce return or cause loss of value?

Interest rate

Exchange rate

Economic growth

Fiscal policies

Credit risk

Corporate governance

Which product does these risk factors affect? FGN BondsPrivate EquityReal EstateEquityCash (TBs, BAs,CPs,etc)State & Corporate Bonds

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Peculiarities of Financial Products - RiskCash is king; when do you need back the cash?When you need back the cash determines the tenor of the product

The earlier you need cash, the lower the return

Consider how easy it is to transform a product back into cash

Cash is king

FGN Bonds Corporate BondsCash (TBs, BAs, CPs, etc)State Government BondsReal Estate/Private EquityQuoted Equities


Peculiarities of Financial Products - LiquidityReturn comparison: Equity Vs. BondsDoes equities truly compensate investors for the risk of volatility

Is the long term benefit of equities true in reality?

How long can the long term be?


Peculiarities of Financial Products - Return ComparisonThe Risk and Return Pay-off; More Risk , More Return

Source: UBA Capital Research, Vanguard Group9INVESTMENT BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING

Peculiarities of Financial Products Return vs RiskThe Investment Process


INVESTMENT BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING

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Why you need an Investment Advisor?Expertise and in-depth knowledge of the financial marketTo determine optimal mix of investment to achieve set goalsAccess to a broad range of investment opportunities/productsTimely and effective reaction to changes in the market Close monitor of investment portfolioTracking of all returns, including dividends and bonusesINVESTMENT BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING

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UBA Capital Group The One-Stop Shop for your Financial NeedsUBA Capital Group, a major financial and investment services provider listed on the main board of the Nigerian Stock Exchange. It was spun-off from UBA Plc in 2012 following the directive of the Central Bank of Nigeria requiring all commercial banks to divest from non-core banking activities.The Group's business is conducted primarily in Nigeria with a Pan-African footprint and aspirations to expand to other major business capitals globally by leveraging on its broad reach and extensive market access to provide both domestic and cross-border services.As at 01 December 2013, the Group had 4 billion shares in issue, a market capitalisation of US$39.6 million, and total assets of over US$407 million.UBA Capital Plc is a leading financial and investment services institution and is made up of businesses that are leading players in their respective business segments. UBA Capital Plc is well positioned to play a strategic role in helping its clients achieve their strategic objectives through its robust suite of financial and investment service offerings UBA Capital Plc is poised to shape Africas financial futureUBA Capital PlcUBA Asset Management UBA Capital-Investment Banking UBA MetLifeUBA Trustees UBA NomineeUBA SecuritiesINVESTMENT BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING

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UBA Capital Plc Products and ServicesUBA Capital Plc Service OfferingsInvestment BankingAsset ManagementSecuritiesTrusteeshipDebt Capital MarketsEquity Capital MarketsMergers and Acquisition Project FinancePortfolio ManagementMutual Funds Securities Dealing (Fixed Income & Equity)Equity Portfolio ManagementReceiving Agent to New IssuesCorporate TrustsBond TrusteeshipPrivate TrustsCustodial ServicesResearch Wealth ManagementStructured FinanceReal Estate AdvisoryStock Broker to Primary IssuesDesignated Adviser to SMEsCollective Investment TrustsThough UBA Capital operates out of Lagos, Abuja and Port-Harcourt in Nigeria, we have unlimited access to our customers due to our ability to leverage on broad reach and borderless access to key financial centres.Supplemental Market MakingINVESTMENT BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING

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UBA Capital Plc Asset Management Products and ServicesFixed Income InvestmentPortfolio Management Investment Mutual FundInvestmentStaff Investment Scheme Funds invested in Fixed Income Equities Fixed Income Equities Fixed Income Fixed IncomePrincipal GuaranteedYesNoDepends on plan chosenYesReturns GuaranteedYesNoDepends on plan chosenYesExpected ReturnMediumHighDepends on plan chosenMediumMinimum Investment Amount N100,000 N20,000,000 N50,000 N20,000

Minimum Investment Period1 month12 months1 month3 monthsRiskLowMediumMediumLowINVESTMENT BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING

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UBA Capital Plc Private Trusts Products and ServicesProductsServicesWill & ExecutorshipsWhere a Trust is built into the Will and appointment is so made in the Will and we can also act as Executor and / or Trustee of your Will. In this respect, we undertake : Bury the deceased in the manner suitable to the Estate, determine the validity of the Will etc.Private Education TrustIt is essentially a Trust set aside to secure the education of BeneficiariesPrivate Investment Trustit is a Trust for long term saving and investment under Trust towards pre defined purposes such as future business, family holiday, real estate etc.Family Trusts & Family Officeit is a Trust to manage family estate as a single entity , structuring family offices.Nominee Services

We hold shares for Private Clients in Nominee name and follow up with the collection of dividends and bonuses


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UBA Capital Plc Securities Trading Products and ServicesUBAS High PrimeUBAS Prime UBAS Thrive II

UBAS Thrive (ONLINE)Target InvestorHigh Net- worth IndividualMiddle- class Income EarnerRetailRetailMinimum Investment Amount Silver - N 50 m Gold - N 100m Platinum N 150m or the equivalent in Stock valueN5 million or the equivalent in Stock valueN50,000.00 or equivalent in Stock valueZero account opening balanceCommission Negotiable 1.35%1.35%1.35%Additional ServiceSpecial account set- up with CSCS

A dedicated account officerA dedicated customer service deskExecution onlyWe adopt an integrated approach that draws on the experience and competence of the firm, to deliver results above and beyond expectations and create value for our clients


UBA Securities Limited - Our Value PropositionFast and efficient executionSwift and accurate feedbackCompetitive pricingBlock trades and liquidity

Independent researchPrompt market information and guidanceCorporate AccessDedicated analystsSkilled and Experienced ProfessionalsBest-in-Class TechnologyOn-line service platformINTEGRITY & RELIABILITYINVESTMENT BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING

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Introducing www.investnow.com.ng


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InvestNow.com.ng - Features A self service, real time on-line platform, providing independent online access to Securities Trading, Asset Management, Trusteeship from anywhere in the world.

FEATURES

Online Account Opening with zero account balance

Online/Real-time Account funding

24hr Online Client Portfolio Access / Account management

Online / Real time customer support services

Online access to transaction history and reports

Online trading capabilities

Access to real time market data

Access to UBA Capital research

Access to a product specialist


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InvestNow.com.ng Account and Portfolio Management


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InvestNow.com.ng Order Management


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InvestNow.com.ng Contract notes and transaction history


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InvestNow.com.ng - Research

Abiola RasaqHead, Research Office: +234 1 280 8496Mob: +234 803 365 1808Email: [email protected] Michelle DaramolaHead, Private Clients Office: +234 1 280 8341Mob: +234 809 990 5252Email: [email protected] Our Contact

INVESTMENT BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING 24

Motunrayo Ade-FamotiHead, Private Trust Office: +234 1 280 7853Mob: +234 814 227 0960Email: [email protected]

Ahmed MaibeClient Manager Office: +234 1 280 7540Mob: +234 803 307 0440Email: [email protected] BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING

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