Innovative investment solutions that deliver IFA Symposium...September 2018 Innovative investment solutions that deliver David Kingsley, Managing Director, Man Group Confidential.

September 2018

Innovative investment solutions that deliverDavid Kingsley, Managing Director, Man Group

Confidential. For the attendees of the Alexander Forbes IFA Symposium 2018 only. Not for public distribution.

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Overview

The revolution in technology and data is assisting and advancing investment management

Managers that invest in researching and developing new quantitative techniques can unlock new sources of potential returns

At Man we have been able to apply these to a range of different alternative strategies

Our clients are already benefitting from their diversification potential and efficiency of implementation

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Man

As at 30 June 2018.

Any descriptions or information involving investment process or strategies are provided for illustration purposes only, may not be fully indicative of any present or future investments, may be changed at the discretion of the investment manager and are not intended to reflect performance. There is no guarantee of trading performance and past performance is no indication of current or future performance/results. See Important Information at the beginning of this document.

1. Combined AUM of Man AHL and Man Numeric.

Source: Man Group Database. 2

Expertise and technology seeking to offer high quality investment strategies

Man runs approximately USD 57 billion1 in systematic

strategies

Researching, developing and trading systematic strategies

since 1987 – with emphasis on diversification

26 years’ experience of risk oversight and portfolio

construction helps implement strategies at high capacity

Robust approval process and fiduciary oversight

Alpha Expertise

We believe that state-of-the art systematic strategies

necessitate state-of-the art technology at all stages

Aim to keep trading costs at an absolute minimum

Man’s alternative strategies are therefore executed in-

house, on equal footing with other strategies

Pioneer in systematic trading for more than 30 years

Over 400 markets traded daily, with 40 counterparties

Execution Technology

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Revolution #1: Computing Power

Source: Thomas Scherer, “50 Years of Moore’s Law”, elektor May 26 2015, https://www.elektormagazine.com/articles/moores-law/6631. 3

“Moore’s Law”

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Today’s phones are more powerful than supercomputers of 30 years ago

The iPhone X is easily more powerful than the Cray 2

CPU 250 GFLOPs

Memory: 256 GB

4Source: Campbell R. Harvey, Duke University

2017 iPhone X (A11 Bionic)Cray 2

The world’s fastest supercomputer: 1985-1990

CPU: 1.9 GFLOPs*

Memory: 2GB

Weight: 5,500 pounds

Cost: $32 million (current $)

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1997 - $100

2000 - $10

2004 - $1

2018 - $0.04

Revolution #2: Data Generation & Storage

Source: Man Group database; IBM, BIG DATA + MAINFRAME, 2014, https://www.ibm.com/developerworks/community/files/form/anonymous/api/library/054c2ab9-ea33-4c70-b0c6-b5bb2482a098/document/7de665ff-2327-41a8-b7b0-5f0bba97356f/media/BIG%20DATA%20%2B%20MAINFRAME.pdf; McKinsey Global Institute, Big data: The next frontier for innovation, competition and productivity, June 2011, 5

90% of data that exists today generated in last 2 years

Year 2020: IBM projects 35 zettabytes (1 ZB = 1 billion TB)

McKinsey projection: 40% growth per year

Man AHL data library

Holds: 1.5 trillion price ticks

Peak rate: 120,000 ticks per second

22 Jan 2016: 2.2 billion price ticks

Nov 2015: 1.2 billion / day

Jun 2015: 800 million / day

Cost per GB of storage

1981 - $300,000

1987 - $50,000

1990 - $10,000

1994 - $1000

1997 - $100

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The growth of data represents both a challenge and an opportunity

1. Source: Patrick Cheesman (via EE Times: Digital Data Storage is Undergoing Mind-Boggling Growth, Dr. Lauro Rizzatti, Verification Consultant 14/9/2016). 6

Less resourced investors may struggle to harness the growth of data. We believe the real opportunity is in the areas with high

barriers to entry. These can be intellectual, financial or operational.

The explosion of data¹

0

10,000

20,000

30,000

40,000

50,000

60,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Exabyte

s(b

illio

ns o

f G

B)

Structured data Unstructured data

“Between the dawn of civilization and

2003, we only created five exabytes;

now we're creating that amount every

two days.”

Hal Varian,

Chief Economist at Google.

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Artificial Intelligence and Machine Learning

A unique collaboration between Man Group plc and Oxford University

Opened Summer 2007

Vision to become the world leading center for research in quantitative finance

Research focus: Machine Learning in alternative investments

Ongoing collaborations with Computer Science, Economics, Mathematics, Statistics

Man Research Laboratory

Embedded commercial research laboratory

Staffed by employees working on dedicated research projects

Strong focus on quant

Source: Man Group. 7

Leverage machine learning in investment

The Oxford-Man Institute of Quantitative Finance

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What is Machine Learning?

Source: Man database, Google 8

Machine learning is a collection of statistical algorithms that allow machines to

learn about the environment and to interact with it.

Historically, machine learning algorithms have been developed in Engineering,

Computer Science, Robotics or Artificial Intelligence departments of

universities.

These algorithms leverage on large amounts of data and are

capable of uncovering non-linear relationships that a human

would find hard to detect.

Where can we find machine learning today?

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What is Machine Learning?

Source: Google 9

Take face recognition, for example

Combine with next slide

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Technology provides opportunities for quantitative managers and …

Quantitative manager challenges

Invest in new sources and higher volumes of data

Develop new quantitative techniques

Invest in speed

Illustrative example. For informational purposes only.

Source: Man Group proprietary database. 10

Linear Combination

Short-term trend

Conventional trend following suggests a

neutral position

+-

+

-

Long

-te

rm tre

nd

Machine Learning algorithm may suggest a

long position

Machine Learning

Short-term

trend

+-

+

-

Long

-te

rm tre

nd

Long position

Neutral position

Short position

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… and technology provides opportunities for both quantitative and

discretionary managers

Discretionary manager challenges

Analyse and improve decisions of human investment managers

Focus on skills that they have, remove other exposures

Deliver customised data to investment managers

Factor chart: Data from August 2011 to March 2018. For illustrative purposes only. Please note that the attribution data is not intended to represent actual past or simulated past performance of an investment product and does not take into account sales and redemption charges where such costs are applicable. Source: Man Group proprietary database. 11

-25%

0%

25%

50%

75%

100%

Aug-11 Aug-12 Aug-13 Aug-14 Aug-15 Aug-16 Aug-17

Gro

ss p

erf

orm

an

ce

att

rib

utio

n

Specific Country Market Industry Style

Removing factor exposures has been shown to improve discretionary returns

Past performance is not indicative of future results. Returns may increase or decrease as a result of currency fluctuations.

At Man we found discretionary managers had

little alpha from country, market, industry or

style selection

Technology allows those factor exposures and

risk budgets to be spent better

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Innovative investment solutions

1. Represents slippage based on one of Man AHL’s Flagship Programmes using Momentum. Man AHL executes futures and FX flow using algorithms developed internally since 2002. External broker algorithms largely used for benchmarking Man AHL’s Alpha Programme’s futures slippage yield is the realized annual cost during 2014 since inception on 3/3/2014, executed as part of strategies with AUM of USD 4.2bn. Man AHL executes a random portion of its trades using four broker algorithms for benchmarking purposes. The algorithmic slippage is the realized slippage of broker algorithms for Equities, FX and Fixed Income and reported broker realised slippage for Fixed Income and Commodities.

Any descriptions or information involving investment process or strategies is provided for illustration purposes only, may not be fully indicative of any present or future investments, may be changed in the discretion of the investment manager and are not intended to reflect performance. See Important Information at the beginning of this document.

Source: Man Group Database.

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In-house trading platform seeks to help protect clients’ returns from hidden costs

Man has almost three decades of experience in developing systematic trading

methodologies

Institutional scale helps sustain investment in our in-house developed global

execution systems

Continuous R&D to improve platform and rigorous benchmarking with external brokers

Man’s Execution Costs1

Futures Markets

27

50

63

0

20

40

60

80

Bps

9

20

33

0

10

20

30

40

Bps

FX Markets

Man Internal Execution

Best Broker Algorithm

Worst Broker Algorithm

Why Execution Matters: Total Cost of Accessing a Market

Commissions

Settlement costs

Custodian costs

Administration costs

Bid/offer spreads

Timing

Market impact

Return decay

HFT Interference

Pre-trade impact

Signal gaming

T R

A D

I N

G C

O S

T S

EXPLICIT

IMPLICIT

HIDDEN

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Conclusion

The revolution in technology and data is assisting and advancing investment management

Managers that invest in researching and developing new quantitative techniques can unlock new sources of potential returns

At Man we have been able to apply these to a range of different alternative strategies

Our clients are already benefitting from their diversification potential and efficiency of implementation

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Important information

This information is communicated and/or distributed by the relevant Man entity identified below (collectively the “Company”) subject to the following conditions and restriction in their

respective jurisdictions.

Opinions expressed are those of the author and may not be shared by all personnel of Man Group plc (‘Man’). These opinions are subject to change without notice, are for information

purposes only and do not constitute an offer or invitation to make an investment in any financial instrument or in any product to which the Company and/or its affiliates provides

investment advisory or any other financial services. Any organisations, financial instrument or products described in this material are mentioned for reference purposes only which

should not be considered a recommendation for their purchase or sale. Neither the Company nor the authors shall be liable to any person for any action taken on the basis of the

information provided. Some statements contained in this material concerning goals, strategies, outlook or other non-historical matters may be forward-looking statements and are based

on current indicators and expectations. These forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to update or

revise any forward-looking statements. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those contained in

the statements. The Company and/or its affiliates may or may not have a position in any financial instrument mentioned and may or may not be actively trading in any such securities.

This material is proprietary information of the Company and its affiliates and may not be reproduced or otherwise disseminated in whole or in part without prior written consent from the

Company. The Company believes the content to be accurate. However accuracy is not warranted or guaranteed. The Company does not assume any liability in the case of incorrectly

reported or incomplete information. Unless stated otherwise all information is provided by the Company. Past performance is not indicative of future results.

Unless stated otherwise this information is communicated by Man Solutions Limited which is registered in England and Wales at Riverbank House, 2 Swan Lane, London, EC4R 3AD.

Authorised and regulated in the UK by the Financial Conduct Authority.

This material is proprietary information and may not be reproduced or otherwise disseminated in whole or in part without prior written consent. Any data services and information

available from public sources used in the creation of this material are believed to be reliable. However accuracy is not warranted or guaranteed. © Man 2018.

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