www.loys.de

LOYS - Specialist Investment Boutique

Founded in 1995 as a regional German financial advisory company, LOYS is now a specialised investment boutique with a focus on investing in global equities. LOYS currently offers two products, a mutual fund as well as a single hedge fund in the category equity long short. Both funds are actively managed and follow a fundamental stock picking approach similar to the principles Benjamin Graham used. LOYS is owner-operated and independent. Research and fund management are carried out by LOYS partners Dr. Christoph Bruns and Thomas Meier. Most other corporate functions are executed by LOYS founding partners Dr. Heiko de Vries and Frank Trzewik. The aforementioned four own LOYS and form the board of management.

LOYS' structure

LOYS thrives on a rather unique set of structural pillars which set it apart from most of its competitors.

• LOYS is majority-owned by its fund managers and therefore has a dominant fund management culture.
• With headquarters in Oldenburg and fund management offices in Frankfurt and Chicago, LOYS possesses an international spirit.
• As an owner-operated asset management house LOYS does not belong to a financial institution and is therefore completely independent.
• All LOYS owners and directors invest their own money alongside the LOYS clients in the LOYS Global funds.

LOYS' investment philosophy

These structural factors allow LOYS to follow and live an active investment philosophy which rests on the following elements:

• Research driven culture.
• Rigorous fundamental research.
• Proprietary valuation models.
• Anti-cyclical behaviour.
• True long-term investment horizon.
• Margin of safety concept.
• Absolute return orientation.
• Strict buying and selling discipline.

LOYS' portfolio characteristics

The unique portfolio characteristics of the LOYS Global funds can be summarised as:

• Low portfolio turnover.
• Concentrated position sizes
• Below average PE-ratios.
• Above average free cash flow generation.
• High tracking error vis-à-vis MSCI world.
• Usually no turnaround stocks.
• Occasionally high cash positions.
• Usually hedging of net foreign currency exposures.
• Usually no IPOs.
• Usually no stocks with former private equity or hedge fund ownership.
• Return enhancement through call and put writing as well as securities lending.

LOYS risk management procedures

The LOYS risk management procedures are thorough and follow state-of-the-art techniques. LOYS strongly believes that risk management starts at the research stage where thorough fundamental knowledge of businesses is the key to superior judgement and returns. Nevertheless, economic diversification is essential to LOYS. Furthermore, the long investment horizon helps to engage in time diversification too. Together with the strictly implemented margin of safety principle, these elements ensure the conservative nature of the portfolios.

LOYS fund managers

The LOYS fund managers have relevant and significant experience managing global equity mandates. Their proven track records support the conservative nature of LOYS as an asset management company.

Dr. Christoph Bruns joined Union Investment, Germany's third largest asset management company, in 1994. He was appointed head of the Equity Department in1996. Under Bruns' leadership, assets under management surged tenfold to over $100 billion. In 2000, he was promoted to the post of Chief Investment Officer. His outspoken shareholder value advocacy addressing German corporate governance received international attention. Through his frequent appearances in the media, Dr. Bruns has also become well known to a wider public in Germany. In recent years, Dr. Bruns personally received various awards for outstanding investment performance: e.g. the Lipper Award in the categories 'global equities' and 'global balanced funds' for one-year performance; Swiss Micropal Award for 'global and US equities' for one-year performance as well as the Micropal Award in the category 'global equities' for the three-year-performance.

In addition, Dr. Bruns' investment team received numerous other performance awards. The global investor magazine, Institutional Investor, named Christoph Bruns Germany's best fund manager. Dr. Bruns left Union Investment in 2002, and moved to the USA for personal reasons. In 2004, he joined LOYS as partner and fund manager to help establish an independent asset management company in Germany. Christoph Bruns received his masters and doctoral degrees in finance from The University of Münster, one of Germany's leading business schools. His doctoral thesis analysed the phenomenon of 'excess volatility' and 'speculative bubbles' in the German equity markets. Dr. Bruns' extensive theoretical and practical knowledge of the investment field led him to co-author two widely recognised books on portfolio management topics.

Thomas Meier joined Union Investment in 1997 and became Dr. Bruns' deputy. He took over the company's flagship global equities fund in 2000 and has proven himself as an outstanding performer since then. In 2006 he joined LOYS to realise his entrepreneurial vision in active and independent asset management.

LOYS Global Master Hedge Fund

The LOYS Global Master Hedge is a single hedge fund in the category long short with a long bias. Usually the fund takes 10 to 15 long positions and occasionally short positions. Leverage is possible but not intended. Long positions are only bought if they appear to possess an undervaluation of at least 30%. No geographic limits apply. The current fund size ensures maximum investment flexibility.

LOYS GmbH, Phone +49 441/9 25 86-0, www.loys.de, info@loys.de

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