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BASIC INVESTMENT PRINCIPLES

BASIC INVESTMENT PRINCIPLES. Presentation at the Nigerian Stock Exchange Investors Clinic for Registered Shareholders Associations. MARCH 2014. INVESTMENT BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING . Outline. Understanding “YOURSELF” as an investor.

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BASIC INVESTMENT PRINCIPLES

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  1. BASIC INVESTMENT PRINCIPLES Presentation at the Nigerian Stock Exchange Investors Clinic for Registered Shareholders Associations MARCH 2014 INVESTMENT BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING

  2. Outline Understanding “YOURSELF” as an investor Peculiarities of Financial Products The Investment Process Why you need an “Investment Advisor”? UBA Capital Group – The One-Stop Shop for your Financial Need Products and Services Investnow.com.ng INVESTMENT BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING

  3. Understanding “YOURSELF” as an investor - The AgeFactor • 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 asset A Starter Strong appetite and natural headroom for high risk Alternative income sources Less need for liquidity from investment • Wealth accumulation stage • Split savings into long- and short-term goals • Think equities for long-term; “liquid” assets for short-term • Growth is the target Consolidation stage Preparing for retirement Less appetite for risk, strong appetite for physical assets like real estate Increasing preference for income A fulfilled retirement Very low risk appetite Less energy Focus on stable income Fixed income products and realty are often the attraction 20’s 30s-40’s 40s-50’s 60’s+ INVESTMENT BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING

  4. Understanding “YOURSELF” as an investor - Investing • The Four Cardinal Principles of Investing 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 INVESTMENT BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING

  5. Peculiarities of Financial Products - Asset Classes • Money Market • Real Estate • Reliable source of income • Flexible choice amongst quality, maturity dates, returns • Liquidity • Low risk investments • Diversification from purely financial instruments • A good hedge against inflation • Components of both long term capital appreciation and current return in form of rental income • Moderate risk investment • Bonds • Steady income from coupon payments • Income also earned from capital appreciation • Traded OTC • Low risk investments • Private Equity • Additional diversification opportunity to portfolio • Commodities offer best hedge against inflation • Private equity provide market-independent (absolute) returns on investment • Lock-in periods (investment horizon) for private equity could be high • High risk investmenrts • Equities • On a steady recovery path in 2012 • Historically, has outperformed all other investment vehicles in the long run • Good hedge against inflation • Moderate risk INVESTMENT BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING

  6. Peculiarities of Financial Products - Risk • What 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? Let’s think about the risk of financial products Private Equity Real Estate Equity State & Corporate Bonds FGN Bonds Cash (TBs, BAs,CPs,etc) INVESTMENT BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING

  7. Peculiarities of Financial Products - Liquidity • 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 Cash is king; when do you need back the cash? Cash (TBs, BAs, CPs, etc) FGN Bonds State Government Bonds Corporate Bonds Quoted Equities Real Estate/ Private Equity INVESTMENT BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING

  8. Peculiarities of Financial Products - Return Comparison • Does 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? Return comparison: Equity Vs. Bonds INVESTMENT BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING

  9. Peculiarities of Financial Products – Return vs Risk The Risk and Return Pay-off; More Risk , More Return Source: UBA Capital Research, Vanguard Group INVESTMENT BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING

  10. The Investment Process INVESTMENT BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING

  11. Why you need an “Investment Advisor”? • Expertise and in-depth knowledge of the financial market • To determine optimal mix of investment to achieve set goals • Access to a broad range of investment opportunities/products • Timely and effective reaction to changes in the market • Close monitor of investment portfolio • Tracking of all returns, including dividends and bonuses INVESTMENT BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING

  12. UBA Capital Group – The One-Stop Shop for your Financial Needs • UBA 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 Africa’s financial future UBA Capital Plc UBA Capital-Investment Banking UBA Trustees UBA Securities UBA Asset Management UBA MetLife UBA Nominee INVESTMENT BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING

  13. UBA Capital Plc – Products and Services UBA Capital Plc Service Offerings Investment Banking Trusteeship Asset Management Securities Debt Capital Markets Corporate Trusts Portfolio Management Securities Dealing (Fixed Income & Equity) Equity Capital Markets Bond Trusteeship Mutual Funds Equity Portfolio Management Mergers and Acquisition Private Trusts Wealth Management Receiving Agent to New Issues Stock Broker to Primary Issues Project Finance Custodial Services Structured Finance Designated Adviser to SMEs Collective Investment Trusts Real Estate Advisory Supplemental Market Making Research • Though 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. INVESTMENT BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING

  14. UBA Capital Plc – Asset Management Products and Services INVESTMENT BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING

  15. UBA Capital Plc – Private Trusts Products and Services INVESTMENT BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING

  16. UBA Capital Plc – Securities Trading Products and Services INVESTMENT BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING

  17. UBA Securities Limited - Our Value Proposition • We 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 • Fast and efficient execution • Swift and accurate feedback • Competitive pricing • Block trades and liquidity • INTEGRITY • & • RELIABILITY • Skilled and Experienced Professionals • Best-in-Class Technology • On-line service platform • Independent research • Prompt market information and guidance • Corporate Access • Dedicated analysts INVESTMENT BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING

  18. Introducing www.investnow.com.ng INVESTMENT BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING

  19. 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 INVESTMENT BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING

  20. InvestNow.com.ng – Account and Portfolio Management INVESTMENT BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING

  21. InvestNow.com.ng – Order Management INVESTMENT BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING

  22. InvestNow.com.ng – Contract notes and transaction history INVESTMENT BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING

  23. InvestNow.com.ng - Research INVESTMENT BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING

  24. Our Contact Ijeoma Michelle Daramola Head, Private Clients Office: +234 1 280 8341 Mob: +234 809 990 5252 Email: ijeoma.daramola@ubacapitalgroup.com AbiolaRasaq Head, Research Office: +234 1 280 8496 Mob: +234 803 365 1808 Email: abiola.rasaq@ubacapitalgroup.com Motunrayo Ade-Famoti Head, Private Trust Office: +234 1 280 7853 Mob: +234 814 227 0960 Email: motunrayo.ade-famoti@ubacapitalgroup.com Ahmed Maibe Client Manager Office: +234 1 280 7540 Mob: +234 803 307 0440 Email: ahmed.maibe@ubacapitalgroup.com INVESTMENT BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING

  25. Feedback Questions and Answers INVESTMENT BANKING | ASSET MANAGEMENT | TRUSTEESHIP | SECURITIES TRADING

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