LO Funds (CH) Swiss Cap (Ex-SMI®) Newsletter

LO Funds (CH) Swiss Cap (ex-SMI®) Newsletter

High Conviction • Equities 31 August 2021

PERFORMANCE MONTH- YEAR- INCEPTION-TO- 31.08.2021 INCEPTION AUM TO-DATE TO-DATE DATE 2020 2019 2018 2017 2016 LO Funds (CH) – Swiss Cap (ex-SMI®) PD [1] 2 September 1996 CHF 663 mn 2.36% 24.64% 1147.22% 9.00% 32.93% -16.04% 34.37% 11.11% LO Funds (CH) – Swiss Cap (ex-SMI®) ID [2] 2.42% 25.27% 1311.37% 9.82% 33.93% -15.41% 35.38% 11.95% Benchmark [3] 2.49% 23.70% 1124.89% 8.07% 30.42% -17.23% 29.73% 8.50%

Past performance is not a guarantee of future results. Performance is presented net of fees. [1] Dividend distributed private client share class, net performance in CHF. [2] Dividend distributed institutional client share class, net performance in CHF. [3] SPI Extra TR since 31 December 2004, previously SPI Small & Mid-Cap TR.

PERFORMANCE COMMENT outperformed defensives. By style, growth outperformed value. In the European context, Information Technology, Utilities and Healthcare have LO Funds–Swiss Cap (ex-SMI)’s institutional share class finished August been the best performing sectors, while Consumer Staples, and in up 2.42%, roughly in line compared to its benchmark, the SPI Extra TR, particular Consumer Discretionary, lagged. The Financial sector also which advanced by 2.49%. gave a strong performance as US 10-year yields climbed from lows of The overweight positions in Polypeptide and Comet Group, as well as 1.17% at the beginning of the month to 1.312%. not being invested in Adecco, were again among the biggest Leading indicators were disappointing in August. While the August US contributors to relative performance in August. Overweights in Cembra manufacturing ISM survey came in ahead of expectations (0.4 points up Money Bank, Swatch Group and Bucher Industries detracted from it. In to 59.9 versus expectations of a 1 point decline), the Caixin China the SPI Extra, Consumer Staples, Utilities and Communication Services manufacturing PMI continued to decline to 49.2, the lowest level since were the best performing sectors, while Consumer Discretionary was February last year, impacted by the recent resurgence of Covid-19 the only sector to finish in the red. cases. Eurozone PMIs also slipped in August to a two-month low but still indicate an acceleration in growth in Q3 2021. That said, the MARKET REVIEW manufacturing PMI declined more strongly than expected, driven by weaker activity in Germany, as supply-side constraints remained a key The global equity market posted strong returns in August. The market concern, while overall price pressures stayed high. The German IFO climbed to new highs in the US (S&P 500 +2.9%), Europe (Stoxx 600 index declined for a second month in August: the assessment of current +2.0%) and Switzerland. In Switzerland, the Swiss Performance Index conditions improved, indicating solid activity in Q3 2021, but firms climbed by 2.4%, while the SPI Extra increased by 2.5%, making adjusted their expectations markedly lower. Consumer sentiment also August the tenth consecutive month with positive returns and the started to fade, with the US Conference Board report falling below continued outperformance of small and mid caps. Significant 2021 expectations to 113.8 in August from 125.1 in July. Both the present earnings upgrades have been a key bull catalyst over the last few weeks situation index and the expectations index dropped as households and the strong Q2 2021 earnings season has triggered a powerful wave expressed concerns about the Delta variant and, to a lesser extent, of 2021 EPS upgrades in Europe and the US. rising gas and food prices. The Conference Board index had nearly While the performance was broad-based, cyclicals only slightly recovered to its pre-pandemic level in June, and its July and August

INVESTMENT TEAM PRODUCT SPECIALISTS ZÜRICH Johan Utterman +41 44 214 1546 GENEVA Edouard de Cournon +41 22 709 9588 ZÜRICH Fabian Wiederin +41 44 214 1542 GENEVA Pascal Menges +41 22 709 9519 ZÜRICH Damian Burkhardt +41 44 214 1547

Please read important information at the end of this document. Past performance is not a guarantee of future results. For use of recipient only, do not forward. Monthly publication of Lombard Odier Investment Managers. Newsletter · LO Funds (CH) - Swiss Cap (ex-SMI®) · Data as at 31 August 2021 Page 1/4 Newsletter drops still leave the survey at an elevated level – in contrast to the gaining significant market shares in this space will ensure healthy University of Michigan survey, which plunged to its lowest level in a growth rates for years to come regardless of the semi backdrop. decade this month. QUARTERLY OUTLOOK PORTFOLIO ACTIVITY The very expansionary monetary and fiscal policy has triggered a boom In August, we added positions in Bachem, Galenica, Kardex and in equity markets that has been supported by resilient growth and SoftwareOne, while exiting Cembra Money Bank. Regarding the latter, earnings upgrades while yields have been low. The relative we expect the stock to be dead money going forward as the growth attractiveness of dividend yields in the current world of powerful outlook has significantly deteriorated after its key customer, Migros, quantitative easing by the ECB and the Fed has in fact been a key driver terminated their credit-card partnership. of nearly USD 1 trn of worldwide net inflows to equity funds since the start of this year. We take the view that growth will likely slow down in STOCK OF THE MONTH the coming quarters as softening macro data (falling leading indicators, weakening auto sales and persistently high inflation metrics) will Swiss semi play Comet Group has been a top-three relative coincide with less accommodative central banks. As central banks are performance contributor for two consecutive months after shares soared about to start discussions about reducing their massive bond-buying by 70% since mid-May to new all-time highs in late August. Comet and equity markets will likely price in weakening growth, we expect to delivered a very strong set of H1 2021 results in mid-August and has see higher volatility going forward. As a result, our selective approach in several stock-specific catalysts still coming up beyond the continuous stock picking will remain key to keep outperforming the market. strong demand environment in the semi space. The company is hosting a capital markets day in mid-November, where we are likely to get an update on the highly-anticipated RF Generator, which is launching next SINCERELY, year and is already in beta testing. Incremental revenues from Comet LO Funds (CH)–Swiss Cap (ex-SMI) investment team.

Newsletter · LO Funds (CH) - Swiss Cap (ex-SMI®) · Data as at 31 August 2021 Page 2/4 Newsletter

IMPORTANT INFORMATION The following risks may be materially relevant but may not always be Deutsche Girozentrale, Mainzer Landstraße 16, D-60325 Frankfurt am adequately captured by the synthetic risk indicator and may cause Main – Italy. Supervisory Authority: Banca d’Italia (BOI)/ConSob, Paying additional loss: Agents: Société Générale Securities Services S.p.A., Via Benigno Crespi, - Liquidity risk: Where a significant level of investment is made in 19/A – MAC 2, 20159 Milano, State Street Bank International GmbH – financial instruments that may under certain circumstances have a Succursale Italia, Via Ferrante Aporti, 10, 20125 Milano, Banca Sella relatively low level of liquidity, there is a material risk that the fund will Holding S.p.A., Piazza Gaudenzio Sella, 1, 13900 Biella, Allfunds Bank not be able to transact at advantageous times or prices. This could S.A.U., Milan Branch,Via Bocchetto 6, 20123 Milano, BNP Paribas reduce the fund's returns. Securities Services, With its registered office in Paris, rue d’Antin, 3, - Operational risk and risks related to asset safekeeping: In specific and operating via its Milan subsidiary at Piazza Lina Bo Bardi, 3, 20124 circumstances, there may be a material risk of loss resulting from Milan – Liechtenstein. Supervisory Authority: Finanzmarktaufsicht human error, inadequate or failed internal systems, processes or Liechtenstein (“FMA”), Representative, LGT Bank AG Herrengasse 12, controls, or from external events. 9490 Vaduz – Netherlands. Supervisory Authority: Autoriteit Financiële - Concentration risk: To the extent that the fund's investments are Markten (AFM). Representative: Lombard Odier Funds (Europe) S.A. – concentrated in a particular country, market, industry, sector or asset Dutch Branch, Gustav Mahlerlaan, 1081 LA Amsterdam – Spain. class, the fund may be susceptible to loss due to adverse occurrences Supervisory Authority: Comisión Nacional del Mercado de Valores affecting that country, market, industry, sector or asset class. (CNMV), Representative: Allfunds Bank, S.A.U. C/de los Padres Dominicos, 7, 28050, Madrid – Sweden. Supervisory Authoriy: Finans Inspektionen (FI). Representative: SKANDINAVISKA ENSKILDA BANKEN RISK AND REWARD PROFILE AB (publ), Kungsträdgårdsgatan, SE-106 40 Stockholm – Switzerland. SRRI score: 6 (1 : Lower risk - potentially lower rewards; 7 : Higher risk Supervisory Authority: FINMA (Autorité fédérale de surveillance des - potentially higher rewards) marchés financiers), Representative: Lombard Odier Asset Management (Switzerland) SA, 6 av. des Morgines, 1213 Petit-Lancy; Paying agent: For professional investor use only. Bank Lombard Odier & Co Ltd, 11 rue de la Corraterie, CH-1204 This marketing document is issued by Lombard Odier Funds (Europe) Geneva. UK. Supervisory Authority: Financial Conduct Authority (FCA), S.A. a Luxembourg based public limited company (SA), having its Representative: Lombard Odier Asset Management (Europe) Limited, registered office at 291, route d’Arlon, 1150 Luxembourg, authorised Queensberry House, 3 Old Burlington Street, London W1S3AB. and regulated by the CSSF as a Management Company within the meaning of EU Directive 2009/65/EC, as amended; and within the Notice to residents of the United Kingdom: The Fund is a Recognised meaning of the EU Directive 2011/61/EU on Alternative Investment Fund Scheme in the United Kingdom under the Financial Services & Markets Managers (AIFMD). The purpose of the Management Company is the Act 2000. Potential investors in the United Kingdom are advised that creation, promotion, administration, management and the marketing of none of the protections afforded by the United Kingdom regulatory Luxembourg and foreign UCITS, alternative investment funds (“AIFs”) system will apply to an investment in LO Funds and that compensation and other regulated funds, collective investment vehicles or other will not generally be available under the Financial Services investment vehicles, as well as the offering of portfolio management and Compensation Scheme. This document does not itself constitute an investment advisory services. Lombard Odier Investment Managers offer to provide discretionary or non-discretionary investment (“LOIM”) is a trade name. management or advisory services, otherwise than pursuant to an The Fund is authorised and regulated by the Luxembourg Supervisory agreement in compliance with applicable laws, rules and regulations. Authority of the Financial Sector (CSSF) as a UCITS within the meaning Singapore: This marketing communication has been approved for use by of EU Directive 2009/65/EC, as amended. The management company Lombard Odier (Singapore) Ltd for the general information of accredited of the Fund is Lombard Odier Funds (Europe) S.A. (hereinafter the investors and other persons in accordance with the conditions specified “Management Company”), a Luxembourg based public limited company in Sections 275 and 305 of the Securities and Futures Act (Chapter (Société Anonyme SA), having its registered office at 291, route d’Arlon, 289). Recipients in Singapore should contact Lombard Odier (Singapore) L-1150 Luxembourg, authorised and regulated by the CSSF as a Ltd, an exempt financial adviser under the Financial Advisers Act Management Company within the meaning of EU Directive 2009/65/EC, (Chapter 110) and a merchant bank regulated and supervised by the as amended. The Fund is only registered for public offering in certain Monetary Authority of Singapore, in respect of any matters arising from, jurisdictions. The articles of association, the prospectus, the Key or in connection with this marketing communication. The recipients of Investor Information Document, the subscription form and the most this marketing communication represent and warrant that they are recent annual and semi-annual reports are the only official offering accredited investors and other persons as defined in the Securities and documents of the Fund’s shares (the “Offering Documents”). They are Futures Act (Chapter 289). This advertisement has not been reviewed by available on http//www.loim.com or can be requested free of charge at the Monetary Authority of Singapore. the registered office of the Fund or of the Management Company, from Hong Kong: This marketing communication has been approved for use the distributors of the Fund or from the local representatives as by Lombard Odier (Hong Kong) Limited, a licensed entity regulated and mentioned below. supervised by the Securities and Futures Commission in Hong Kong for the general information of professional investors and other persons in Austria. Supervisory Authority: Finanzmarktaufsicht (FMA), accordance with the Securities and Futures Ordinance (Chapter 571) of Representative: Erste Bank der österreichischen Sparkassen AG, Am the laws of Hong Kong. Belvedere 1, 1100 Vienna – Belgium. Financial services Provider: An investment in the Fund is not suitable for all investors. There can be CACEIS Belgium S.A., Avenue du Port 86C, b320, 1000 Brussels – no assurance that the Fund’s investment objective will be achieved or France. Supervisory Authority: Autorité des marchés financiers (AMF), that there will be a return on capital. Past or estimated performance is Representative: CACEIS Bank, place Valhubert 1-3, F-75013 Paris – not necessarily indicative of future results and no assurance can be Germany. Supervisory Authority: Bundesanstalt für made that profits will be achieved or that substantial losses will not be Finanzdienstleistungsaufsicht (BaFin), Representative: DekaBank incurred. Where the fund is denominated in a currency other than an

Newsletter · LO Funds (CH) - Swiss Cap (ex-SMI®) · Data as at 31 August 2021 Page 3/4 Newsletter investor’s base currency, changes in the rate of exchange may have an estimated and unaudited. Net performance shows the performance net adverse effect on price and income. All performance figures reflect the of fees and expenses for the relevant fund/share class over the reinvestment of interest and dividends and do not take account the reference period. Source of the figures: Unless otherwise stated, figures commissions and costs incurred on the issue and redemption of are prepared by LOIM. shares/units; performance figures are estimated and unaudited. Important information on benchmarks: Any benchmarks/indices cited Netxperformance shows the performance net of fees and expenses for herein are provided for information purposes only. No benchmark/index the relevant fund/share class over the reference period. This document is directly comparable to the investment objectives, strategy or universe does not contain personalised recommendations or advice and is not of a fund. The performance of a benchmark shall not be indicative of intended to substitute any professional advice on investment in financial past or future performance of any fund. It should not be assumed that products. Before making an investment in the Fund, an investor should the relevant fund will invest in any specific securities that comprise any read the entire Offering Documents, and in particular the risk factors index, nor should it be understood to mean that there is a correlation pertaining to an investment in the Fund, consider carefully the suitability between such fund’s returns and any index returns. of such investment to his/her particular circumstances and, where Important information on target performance/risk: Target necessary, obtain independent professional advice in respect of risks, as performance/risk represents a portfolio construction goal. It does not well as any legal, regulatory, credit, tax, and accounting consequences. represent past performance/risk and may not be representative of actual This document is the property of LOIM and is addressed to its recipient future performance/risk. exclusively for their personal use. It may not be reproduced (in whole or Important information on portfolio composition: The portfolio information in part), transmitted, modified, or used for any other purpose without the provided in this document is for illustrative purposes only and does not prior written permission of LOIM. It is not intended for distribution, purport to be a recommendation of an investment in, or a publication, or use in any jurisdiction where such distribution, comprehensive statement of all of the factors or considerations which publication, or use would be unlawful. This document contains the may be relevant to an investment in, the referenced securities. They opinions of LOIM, as at the date of issue. The information and analysis illustrate the investment process undertaken by the manager in respect contained herein are based on sources believed to be reliable. However, of a certain type of investment, but may not be representative of the LOIM does not guarantee the timeliness, accuracy, or completeness of Fund’s past or future portfolio of investments as a whole and it should the information contained in this document, nor does it accept any be understood that they will not of themselves be sufficient to give a liability for any loss or damage resulting from its use. All information and clear and balanced view of the investment process undertaken by the opinions as well as the prices indicated may change without notice. manager or of the composition of the investment portfolio of the Fund. Neither this document nor any copy thereof may be sent, taken into, or As the case may be, further information regarding the calculation distributed in the United States of America, any of its territories or methodology and the contribution of each holding in the representative possessions or areas subject to its jurisdiction, or to or for the benefit of account to the overall account’s performance can be obtained by the a United States Person. For this purpose, the term “United States Fund or the Management Company. Person” shall mean any citizen, national or resident of the United States Although certain information has been obtained from public sources of America, partnership organised or existing in any state, territory or believed to be reliable, without independent verification, we cannot possession of the United States of America, a corporation organised guarantee its accuracy or the completeness of all information available under the laws of the United States or of any state, territory or from public sources. possession thereof, or any estate or trust that is subject to United States No part of this material may be (i) copied, photocopied or duplicated in Federal income tax regardless of the source of its income. any form, by any means, or (ii) distributed to any person that is not an Important information on performance: Past performance is not a employee, officer, director, or authorised agent of the recipient, without guarantee of future results. Where the fund is denominated in a Lombard Odier Funds (Europe) S.A. prior consent. In Luxembourg, this currency other than an investor’s base currency, changes in the rate of material is a marketing material and has been approved by Lombard exchange may have an adverse effect on price and income. All Odier Funds (Europe) S.A. which is authorised and regulated by the performance figures reflect the reinvestment of interest and dividends CSSF. and do not take account the commissions and costs incurred on the ©2021 Lombard Odier Investment Managers. All rights reserved. issue and redemption of shares/units; performance figures are

Newsletter · LO Funds (CH) - Swiss Cap (ex-SMI®) · Data as at 31 August 2021 Page 4/4