FUTUREThe magazine of Superfund, Issue May 2009 The Future of investing

Bright Future Navigate the ­financial storm with Superfund and gold. © Dewayne Flowers | Dreamstime.com Superfund at the EU Returns in Crisis Richard Shelby Superfund is part of the “Expert Group on For a long time, it was widely believed that No light at the end of the tunnel: US Senator Financial Education” of the EU. One of the profits can only be achieved with high risk. Richard Shelby talks to Superfund about the group’s goals is to make young people more The recent economic crisis proves this consequences of the economic crisis. familiar with business topics. theory no longer holds true. 2∫ FUTURE | Contents

FUTURE in 60 seconds

High Returns in Times of Crisis Superfund Gold

For a long time, alternative investments have been The two go hand in hand with success as the overshadowed by traditional asset classes, especially4 Superfund trading strategy combines10 with stocks. Today, the financial crisis has shocked both gold for added security. In times of crisis experts and ordinary people into action, and worldwide such as these, gold proves its value as a safe efforts are underway to find new approaches that can haven with the added benefit of profit prevent similar plunges in the global economy, as well as potential. While stocks plunge, the price of in investments. Learn more about why managed futures gold continues to climb. Superfund investors funds should play a key role in a secure portfolio. can be satisfied with their returns.

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Contents

Harry Markowitz One-Mile Report: Superfund News Meets Christian Tokyo 18 worldwide26 Baha 30 The Superfund One Mile Ingrid Betancourt was elected Nobel Prize winner Professor location report moves to Woman of the Year 2008 and Harry Markowitz, who has Asia. Welcome to Tokyo! This presented with an award by been in contact with Superfund buzzing financial and business former Federal Chancellor of for many years, and Christian metropolis also hosts some Austria, Alfred Gusenbauer. As Baha came together in a fine culinary attractions. We a partner of the event, San Diego TV studio. They reveal some of the best sushi Superfund was proud to attend discussed managed futures restaurants located in a one- the ceremony at the Palais funds and the advantages of mile radius of Superfund’s Japan Coburg. We also unveil new the Superfund trading strategy office. Join us on a discovery Superfund offices and report which is based on Markowitz’s tour of the famous Tokyo fish on an exclusive event in Zurich groundbreaking 1952 Modern market, which boasts more with special guest, champion Portfolio Theory. than 400 different types of fish. skier Bode Miller.

Page 18 Page 26 Page 30 Christian Baha Founder and owner of Superfund

Interview: Senator Richard Shelby My opinion is not that important

US Senator Richard Shelby has yet to see any light at the end of the Recently, I have been asked more and more by the media tunnel when it comes to the global economic crisis,22 and fears that and investors to speculate when the market will finally recover. hard times are yet to come for the economy. The 74-year-old spoke to And also if this current economic crisis can be compared to Superfund, though not about the crisis but rather about his own that of 1929. All of us are, of course, anxious about what the mistakes and on the long winding road back to normality. In the past future will bring. But we also cannot predict what is around few months, the Senator, who has long-since switched from the the corner. Democrats to the Republicans, has had a lot on his plate with the ailing US auto industry. Consider for example that in December 2007, the DAX was around 8,000 points. At the time, most analysts expected stock markets in Germany to rally. Optimistic estimates were Page 22 even pitched between 8,400 and 10,250 points by the end of 2008. The DAX eventually ended up at 4,800 points. The conclusion? That my personal opinion, or that of other fund managers, is not that important, and neither is that . Because we all work with one basic trading technique: The trend following strategy.

The aim is not to predict something, but, like a surfer, to find the right wave and ride until the end. By using a systematic computer program, human emotions are taken out of the equation. This minimizes risks and avoids human error. Over the long term, managed futures will always be a better investment than stocks. And if you invest for the long term, In the Superfund at the there are two things you need in any case: Limelight heart of Europe 32 34 First, attractive returns and second, strict risk control. This is Producing an advertising Superfund has been awarded exactly what investors receive from managed futures. And you spot involves a great deal one of the 25 official seats on an can take a great deal of comfort from the fact that managed of action. Three advertising EU Committee. The Expert futures are only traded on tightly regulated stock exchanges. spots multiply the fun. The Group on Financial Education advertising spots discussed has invited Superfund to help Systematic trading in managed futures will work as long as in the last issue of FUTURE find ways to improve financial humans have the herd mentality. Therefore, my suggestion have been followed up by education for European citizens. is: invest in broadly diversified systematic trendfollowing two additional sequences, The main focus area for the strategies. This way, you can also make money when stocks creating a series with an Committee is the next are going down. integrated story line. We generation, with the aim of invite you “on set” behind involving young people more in the scenes of the current TV economic matters. Superfund campaign in the USA. is represented in Brussels by Markus Weigl.

Page 32 Page 34 4∫ FUTURE | High returns in times of crisis

Times of Crisis Regardless of which timeframe is used for comparison, the Superfund trading strategy clearly outperforms equity, commodity, and most hedge fund strategies. This is demonstrated, for example, by the development in 2008 when Superfund funds outperformed the MSCI World Equity Index by more than 70 percentage points. Another plus: With a correlation coefficient of close to zero, the performance of Superfund funds is completely independent of other asset categories. High returns in times of crisis | FUTURE ∫5

High Returns in times of crisis

or a long time, it has been widely Fbelieved that investments yield high returns only as a result of higher risk. Recent events have proven exactly the opposite. From its inception until year-end 2008, the Superfund Q-AG1) returned +776% without coming anywhere near the typical risk parameters of equities.

“Change” is the motto of the new US president. In the investment world too, new cards are on the table – with one immediate consequence: The age-old mantra that high returns can only be achieved by taking on higher risk is in serious question. The long series of slumps in the equity markets of both developed economies and emerging markets is ample proof that the risk of incurring large losses was heavily miscalculated or simply ignored for a long time. For a number of years, Superfund founder and owner, Christian Baha, has been voicing his concerns about this gross underestimation of risk: “There is always the

Performance 12 months (2008) 10 years 01/08 – 12/08 01/99 – 12/08 Superfund Q-AG (closed fund) +35.4 % +398.0 % Credit Suisse Managed-Futures Index +18.3 % +96.7 % CISDM Equity Long/Short Index –14.4 % +104.9 % Credit Suisse/Tremont Hedge Funds Index –19.1 % +96.2 % 1) Superfund Q-AG (closed fund), source: TeleTrader. Standard & Poor‘s 500 –38.5 % –26.5 % MSCI World –42.1 % –20.0 % Period: 03/1996 to 12/2008. Past performance is not Source: TeleTrader indicative of future results. 6∫ FUTURE | High returns in times of crisis

threat of risk in investing and markets is not a new one, of crises of 1973 to 1974 and As long as euphoria rules, none more so than when an course. 2000 to 2002, further value equities rise, culminating in investment bubble is building was knocked off these bull markets. up. This is typical of equities, Between 1956 and 2008, markets, which plunged as investors only bet on rising the 500 largest US dividend- –45% and –46%, respectively. When investors sober markets. In contrast to this, bearing instruments of the This was only a little more up, however, they start to investment vehicles that Standard & Poor’s 500 Index, than the –40% that the US scramble for the exit and sell spread their funds widely suffered a total of 10 bear equity index lost in the course their stocks; the consequence are able to bet markets. A bear of one year. is a bear market. The on falling as In a direct market is defined Superfund trading strategy, well as rising comparison, as an extended 100 roads lead by contrast, is not driven by markets, and if equities clearly period of time to the goal greed or fear. Instead, it takes they pursue a achieve lower during which In a direct comparison, full advantage of a wide range clear investment performance equity prices equities clearly achieve lower of modern investment options strategy, such as than managed drop by at least performance than managed which can profit from rising the Superfund futures funds. 20%. This was futures funds. Futures funds, or falling prices in a broadly trading strategy, exactly the same such as Superfund funds, diversified spread of over they are also much better figure by which the index fell boast a number of advantages. 100 different markets such as positioned.” The phenomenon in the bear market of the year Equity markets rise and fall metals, energy, commodities, of high losses in equity 1990. In the equity market with investor confidence. currencies, interest rates, or

It started in 1870 …

he current economic crisis banks collapsed, the British credit Tis in fact more comparable institutions withheld their capital. to the collapse of 1873 than The cost of credit, the inter-bank the Great Depression of 1929. rates, went through the roof. In Many experts have identified September, the stock market parallel features between the collapsed. current situation and the Great Depression of 1929. But this The situation today comparison is lopsided. Back to the 21st century. In 2001, loans were extended to In 1929, the economy collapsed homebuyers who were barely on the back of overspilling able to afford a mortgage, even inventories, the stock market in the best of times. Real estate crash, and Germany‘s inability speculators took on excessive to pay its war debts. This led to risk and repackaged debt into rising pressure on the British gold complex securities. 2007 saw reserves. None of these factors is more than two million petitions for currently of significance. The crisis foreclosures. By that date, trillions of 1873 lasted four years and was of USD had already been invested characterized by problems that are in these credit derivatives. reminiscent of our situation today. In Europe, it started in 1870. The lesson learned from the 1873 crisis? If Wall Street banks fail, the Collapse fallout will not remain limited to During Austro-Hungarian rule in the worldwide financial markets Prussia and in France, the heads of and to a brief period of time. The state supported lending institutions long-lasting reconstruction of the which extended mortgages for the banking sector will also lead to a Supplement to “Frank Leslie’s Illustrated Newspaper” on October 4th, 1873: “The construction of public buildings. In steep rise in unemployment. great financial panic” May 1873, the system collapsed when it became clear that the Go west United States. The current crisis expectations of economic growth After 1873, the centre of gravity of shows another move in the same had been excessively optimistic. the global credit markets shifted direction: From the US to China When the Central European westwards, from Europe to the and India. Go west! equity indexes. With the wide range of investment options Christian Baha on the situation of the markets to choose from, global investment risk goes down.

But only a clear strategy can lay the groundwork for long-term performance. Since the outbreak of the financial crisis, the Superfund trading strategy, which relies on fully automated computer systems, has once again demonstrated the superior value of its approach: Since its inception, the Superfund Q-AG1) yielded +776% in added value. “The quality of managed Reassessing risk futures funds is equally It has often been argued apparent when equity that the risk of managed markets tumble.” futures funds is high compared – Christian Baha with other investment Founder and owner of Superfund instruments. This argument fails when comparing tem­ porary drawdowns which, even in times of weak FUTURE: Last year, Superfund funds performed very well. What is gold going to perform? trends, prove to be tolerably are your expectations for 2009? low with managed futures In view of anticipated inflation, funds. What makes matters Christian Baha: What the financial crisis has clearly demonstrated I predict a further rise in the worse for equity investors is is that the high quality of managed futures funds is equally apparent gold price over the next three that equity markets do not when equity markets tumble. If the global crisis continues in 2009, this to five years. The radical move independently of each will become even more obvious. Even futures funds may experience political measures taken by the other, but market rallies and drawdowns now and then, but this is how markets work. The recovery governments of a number of downturns develop parallel phases are much shorter than stock markets, however. countries, and rising inflation, will to each other in different also push the price of gold up markets, with only slight When investing money, high will work as long as people tend further. time lags. This means an returns are only possible if to follow the crowd. And they will additional risk for investors one takes high risks. Does never stop doing this because it’s You have repeatedly warned who believed they had spread this rule still apply in the face human nature. investors of the excessive risk their funds widely on different of the financial crisis? in equities and you have been markets. Those who wish to This year, can you see any proven right. What do you think escape these tandem moves This assumption is actually particularly strong trends in the stockholders should do now? must take care to diversify incorrect. Superfund funds financial markets, which may their investments broadly. invest in more than 100 markets be profitable for Superfund By no means follow the widely worldwide and thus spread risk funds, yet? given recommendation to hold on A class of its own widely. In addition, we employ to your declining stocks. Wait for Investors who thought that strict risk management – we To be honest, no, we haven’t. The a bear rally and sell your stocks, hedge funds were a panacea never risk more than 2% of trends seen in the past weeks and reduce your stock holdings against sluggish equity or fund assets to one position – months remained the same: Falling and the share of stocks in your and earn extraordinary returns commodity futures markets in the portfolio. You may keep or even through the compound interest energy sector, a drop in equity buy selected equities that do not effect. Depending on the risk- markets, rising bond markets. suffer dramatically in crises. My return profile, good-quality tip: Definitely increase the share of managed futures may earn 18% The gold price is up again after gold and managed futures in your 1) Superfund Q-AG (closed fund), to 30% per year net of fees. This dropping last November. How portfolio. source: TeleTrader. Period: 03/1996 to 12/2008. Past performance is not indicative of future results. Note: This article does not constitute investment advice and is by no means intended to replace any such advice. 8∫ FUTURE | High returns in times of crisis

bond performance were Managed Futures vs. Hedge funds proven wrong in 2008. Hedge funds that were previously hailed for generating positive +35 % An asset class of its own returns even in falling markets For a long time, managed futures came under enormous funds were mentioned in the pressure. And this does not same breath as hedge funds. even include those hedge CASAM CISDM CASAM Distressed Sec. CSFB/Tremont Hedgefunds Index Inappropriately, as managed Superfund funds operated by the once Q-AG1) futures funds are a separate asset “star investment manager” class with little correlation to other Bernard Madoff who –19 % –20 % asset classes. This was particularly defrauded investors of some Period: 1/08 – 12/08, Source: TeleTrader evident over the past 12 months, USD 50 billion with his giant In 2008, Superfund Q-AG1) when the Superfund trading Ponzi scheme. Hedge funds emerged clearly as the winner strategy successfully earned high found themselves in a tight strategy when compared to returns over the course of the spot, because of their need hedge funds. While Superfund year. Hedge funds, by contrast, for bank credit to leverage Q-AG1) gained +35.4%, were hit head-on by the credit their investments. According despite the financial crisis, the crunch. Financing costs rose to Credit Suisse figures, performance of hedge funds, and lending dried up completely. hedge funds were down by such as distressed security In the absence of leverage, an average of –19% between funds, for example, racked up hedge funds lacked collateral for January 2008 and December losses of –20% and –19%. In their lucrative transactions. The 2008. Managed futures funds, terms of risk-return, Superfund outcome: Disappointed investors The Chicago Board of Trade (CBOT), on the other hand, which are Q-AG1) clearly outperforms asked for their money back, which founded in 1848, is the world’s oldest part of this index, remained many hedge funds. accelerated the downward spiral futures exchange. It handles more above water, recording even further. than 50 different types of forward average gains of +18%. This transactions. overview clearly shows that

2008 at a glance February: +14.2 % May: +6.5 %

Superfund Q-AG1) In February last year, Superfund Superfund Q-AG1) The European Central Bank +14 % Q-AG1) gained +14.2% on the +7 % confirmed that since the beginning back of strong trends in the of 2008, large companies have energy, metal, and currency had difficulties raising new credit. markets. The demand for gold The price of crude oil continued –1 % rose as investors looked for an +1 % its surge, climbing to a level of alternative to the USD and a USD 130 as US supplies ran World Equities (MSCI) World Equities (MSCI) hedge against inflation. On 29th low and demands were made Period: 02/2008, Source: TeleTrader February 2008, Comex Gold Period: 05/2008, Source: TeleTrader to tap into strategic oil reserves. traded at close to USD 977. Analysts considered a rise of Superfund funds also profited oil prices of up to USD 200 per from the rise in the price of barrel feasible. The Superfund heating oil. This rise was due to trading strategy was unaffected falling inventories, lower refining by the dimming economic capacity, and severe winter conditions. The energy sector weather in the North-east and returned high profits. Heating Mid-west of the US. At the same oil, gasoline and natural gas time, the economic outlook contributed the most to the May began to cloud over in Europe result. Superfund Q-AG1) closed and in the US. Mention of the the month up +6.5%. word “recession” was still being avoided. High returns in times of crisis | FUTURE ∫9

managed futures funds, such as Superfund funds, cannot Managed Futures vs. Equities be lumped together with other hedge funds, but should be considered an asset class Equities as a risk factor Long-term The past ten years of their own, as has been the Those who hold equities in A look at absolute returns reveals With a maximum decline in value case in the US for quite some their portfolios run a high risk. a world of difference between of –46%, the equities of the 500 time. To achieve sustainable asset Superfund funds and global largest US groups lost much more growth, markets have to rise over equity markets. An investor than Superfund funds, which in The trend is long periods. Superfund funds, on that purchased US equities 10 the worst period were down by your friend the other hand, can earn money years ago would have lost more only –20%. DAX investors and Those who consistently even if the equity markets move than 26%. On the Tokyo stock holders of Japanese equities in the employ the right strategy sideways or tumble. The risk of exchange, more than one-third of Nikkei Index fared even worse: In know how to capitalize even stock market crashes is nothing his money would be gone. The these markets, the worst slump on short-term trends in the new. The current financial crisis Superfund trading strategy has annihilated more than 61% of financial markets. The fully is just adding another chapter gained +400%1) in the same time, asset value. automated Superfund trading to the history of steep market increasing the investment fivefold – systems achieved strong slides. by more than +17% per year1). gains, especially in February, May, and June 2008. The best The 10-year comparison Superfund Q-AG1) + 300 % performance was recorded in highlights the strength S&P 500 + 200 % October of last year with a of the Superfund trading Nikkei 225 monthly gain of +17.5%. strategy. +400% versus + 100 % substantial losses in EU and Japanese equities. 0 % 1) Superfund Q-AG (closed fund). Past performance is not indicative Period: 01/1999–12/2008, of future results. Source: TeleTrader 1999 '00 '01 '02 '03 '04 '05 '06 '07 '08 2009

2008 at a glance June: +9.9 % October: +17.5 %

Rumors surrounding the US Superfund Q-AG1) The US government mentioned Superfund Q-AG1) bank Lehman Brothers proved +10 % for the first time a USD 700 +18 % substantiated. In Europe, inflation billion bailout package for the hit 4%. The US Dow Jones Index troubled financial sector. On dropped below the key level of 11th October, the German DAX 12,000 points. Worldwide, equity –8 % equity index slipped to its lowest –19 % markets were weighed down level since 2005. Equity markets World Equities (MSCI) World Equities (MSCI) massively by slowing economic went on a freefall worldwide. The growth and rising unemployment. Period: 06/2008, Source: TeleTrader fear of global recession became Period: 10/2008, Source: TeleTrader Stock market indexes dropped increasingly pronounced. The oil by between 6% and 10%. While price plunged. In this situation, Superfund funds capitalized on which was highly precarious for the energy sector in February a number of countries, for the and May, in June it derived most worldwide economy and for the of its profit from falling equity equity markets, the Superfund prices. Additional income came trading strategy returned its from the right positioning in best monthly result of 2008, up maize futures. The performance by +17.5%1). Again, the biggest for Superfund Q-AG1) for the contributions to this rise came month was +9.9%. from equity positions. Further gains were earned on futures on the British pound.

Gold | FUTURE ∫11

All that glitters is GOLD

old has always fascinated people the world over and now the precious metal is making a brilliant comeback Gas the world slips further into economic crisis. Gold was one of the first metals that was coveted and used by humankind. Gold also played a key role in the development of many currency systems.

The very first use of gold, countries such as India and A government that owns an artificially. On the other for making jewelry, can be China. Wealth in these regions ounce of gold (31.3 grams) hand, the demand for gold traced back as far as the year has risen significantly over needs the permission of has been rising steadily. In 3500 BC. Whether a certain recent years. Demand for neither the US nor anybody September 2008 alone, Münze Croesus in the 6th century gold jewelry else’s to turn it Österreich (the Austrian BC was the first to mint gold has thus been “Gold is the into cash. The mint) sold 100,000 ounces of coins and issue them as an steadily rising only true supply of gold “Vienna Philharmonics” coins. official means of payment, is while annual currency. It is limited. This Normally, it takes half a year historically disputed. production has preserves is what makes to sell such a quantity. The been declining. wealth. It has it so desirable.” strong demand for the rare Gold today Ten years ago, done so in metal has also had an impact Anyone who wants to South Africa the past and Stable in on its price. During the past buy gold today can acquire it still produced will do so in value five years, the price of gold in the form of gold jewelry, 600 tons. Now, the future. Gold can has doubled. coins, or bullion bars. Gold its output is Worldwide.” never lose its is also used in medicine. The down to 230 Christian Baha value, as may How long will biggest buyer is the jewelry tons per year. be the case the boom last? industry, though. This industry Today, the new number with equities. Gold will In the 1970s, the gold alone accounts for about two- one producing countries is always find a buyer, regardless price rally turned out to be thirds of the annual demand China. The New York Times of the situation in the world a big speculative bubble. This for gold. Gold jewelry is defined the true value of markets. Unlike paper money, time around, the situation still a status symbol, highly gold very concisely: “Gold is gold cannot be duplicated at seems to be different. prized in emerging-market a possession, not a promise. will, as it cannot be created 12∫ FUTURE | Superfund & Gold ∫13 Scoring two Goals at the same time

or investors, this could be Since Professor Harry Markowitz inflation and promises a significant Fdescribed as a typical win-win was awarded the Nobel Prize for his appreciation in value in times of crisis. situation: On the one hand, gold Modern Portfolio Theory in 1990, it has With gold, positive diversification effects adds more stability to any portfolio been widely accepted that: A broadly can thus be achieved in a portfolio. in times of market turbulence. On diversified portfolio is the basis for Gold assets should therefore always be the other hand, managed futures long-term investment performance. As regarded as part of a portfolio and used funds may generate profits in past experience has shown, the price of as a buffer against risk. rising and falling markets and gold has historically moved in a different hedge a traditional securities direction from equities. equities. Gold Like gold, alternative investments, portfolio against losses. Superfund thus meets the demands made by such as managed futures funds, may have a Gold funds combine these two Markowitz for a portfolio investment. strong positive effect on the performance advantages. In addition, gold protects capital against of a traditional securities portfolio in the

The Superfund Why tie a fund to the price of gold? Gold Funds old is regarded as a crisis-resistant dramatic flight into gold by a rapidly increasing +40 % Ginvestment and a hedge against number of investors. Also, gold diversifies a inflation. It is less exposed to inflation than portfolio and thus reduces global risk. Gold the purchasing power of a currency. While is relatively uncorrelated to equities, bonds World the value of gold has, in fact, fluctuated and a large number of other asset classes. Equities in terms of the purchasing power of key Particularly in times of uncertainty triggered (MSCI) +6 % currencies (see chart below), it has not by international conflicts (wars and terrorist Gold Superfund USD/oz Gold*) depreciated over a period of almost 40 attacks), dramatic slides on the stock years. exchanges (market crashes) or in times of economic difficulty of the kind we are –42 % Rising government debt and the worldwide currently witnessing, gold has usually risen economic crisis are increasing the pressure significantly in value, as it is perceived as a Huge returns: Combining the Superfund on major currencies. This could trigger a safe investment. trading strategy with the gold price

Purchasing power of gold Gold in times of crisis +13 % *) Simulated performance: Superfund Gold is Gold 5$ +7 % shown as a combination of the Superfund +6 % Gold +4 % A-strategy (Superfund Q-AG, closed fund) and USD/oz the gold price (USD/ounce) over a period of one 1$ World 1971 1980 1990 2000 2005 Equities year (01/2008 – 12/2008). Simulated performance (MSCI) –7 % –9 % results are provided for informational purposes –11 % –11 % USD 0,2$ 09/1990 09/2001 09/2002 11/2008 only. Past and simulated performance is not Gulf war WTC attack War in Financial indicative of future results. Source: TeleTrader. Source: Bloomberg; Period: 01/1971 – 10/2008 Source: Bloomberg Iraq crisis 14∫ FUTURE | Superfund & Gold

long run as gold reduces the risk of loss as crude oil, wheat, coffee, or cotton. Sources & of the global portfolio and increases its return. Especially in times of crisis, it The trading system Production is important to have such an airbag in Buy and sell signals are calculated one’s portfolio. So what is more obvious by the computer in a fully automated About 40% of the gold that is mined today than to combine both these advantages? process from a variety of indicators and comes from China, the US, South Africa, Superfund Gold funds offer investors historical price data. The Superfund trend and Australia. China has become the world’s both benefits in one product. following trading systems therefore avoid number one producer of gold. Annual output inappropriate, emotion-driven decisions, amounts to about 2600 tons — which Superfund and gold as a computer has no feelings and sticks means that in a period of two years, more The synergies between the Superfund relentlessly to the defined strategy. gold is produced than in the one thousand trading strategy and gold are irrefutable. Trends may continue for a few days or years of the Middle Ages. The problem in The Superfund trading strategy values several months. The systems not only producing gold is separating it from the rock. broad diversification. Futures contracts track rising but also falling markets to When talking about gold ore, we mean rock are traded around the globe. Beside bonds, generate returns. containing gold. equity indexes, and foreign exchange, trading is also done in commodities such The most important role in

Gold panning

Gold panning in Vienna, at the Superfund stand at the Gewinn Fair 2008.

The simplest gold extraction process makes use of the high density of the metal. With gold panning, gold is usually extracted from stream sediments. Water is added to gold- containing sand or grinded rock. As gold is heavier than the surrounding sand, it settles faster to the bottom. The liquid flowing off is passed through fur. Minute gold particles getting caught in the hairs of the fur increase the yield. Today, this process is still being used by hobby gold-seekers, but it is very time-consuming and the result is relatively unprofitable. Superfund & Gold | FUTURE ∫15 the Superfund trading strategy is B is an ideal solution for experienced played by risk control. Global risk is investors looking for high return Gold bullion continuously monitored. Losses are potential. stopped automatically by means of One delivery bullion bar (995‰ fineness) continuously updating stop-loss-limits. Professional investors have known contains 12.44 kg (400 ounces) of gold. Gold The consequence: A price slump, as in already for some time that gold by itself is also made in bars of 10, 20, 50, 100, 500 equities, is highly unlikely. is no longer a “safe haven”. The desired and 1,000 grams, with a fineness of 999.9‰ positive diversification effects for the and is purchased mostly by private investors. The Superfund Gold Funds portfolio come only from when combined With bars of less than one kilo, the spread The Superfund Gold funds are tied with other, independent investments. A (the difference between the banks’ bid and to the price of gold and are offered in managed futures fund combined with asking prices, which closely follow the gold two forms (Strategies A and B). Strategy gold, such as the Superfund Gold Fund, price) is higher and may occasionally A offers a lower-risk entry option, and can attain this goal in the long run, as amount to more than investors who wish to invest money long- it profits from both the rise in the gold 5%. term (for a minimum of five years), can price and from one of the most successful benefit from the solid return potential of computer trading systems worldwide. this strategy. The more dynamic Strategy

Degrees of fineness Carat Designation content (wt./atom) Historically, the fineness of gold has always 24 kt Fine Gold 999 ‰ 100 % been quoted in carats. 24 carats denote 22 kt Gold 916 916 ‰ 83 % pure gold (fine gold). Upon introduction of 20 kt Gold 833 833 ‰ 68 % the metric system, the measure for fineness 18 kt Gold 750 750 ‰ 50 % was changed to “parts per thousand”. Thus, 14 kt Gold 585 585 ‰ 38 % a “750” hallmark on gold products means 10 kt Gold 417 417 ‰ 23 % that 1000 parts of the metal (by weight) 9 kt Gold 375 375 ‰ 20 % contain 750 parts of pure gold. 8 kt Gold 333 333 ‰ 18 % 16∫ Did you know …

… that if all the gold ever mined were combined, it would only make a cube of 20 metres?

Gold Until recently, South Africa was the largest gold producer in the world, but it has 115 m recently been overtaken by China. The precious metal was discovered by Egyptian workers under a fireplace as early early as 4BC and was used as a means of payment in the time of Alexander the Great. It was the Ancient Greeks, however, who used gold in the shape of coins as money. The legendary monarch Croesus is said to have been the first to have coins minted from pure gold (550 BC). The term “gold” comes from the Indo-Germanic word “ghel”, which means blank and shiny, but also 57 m yellow and glittering. Gold cannot be made artificially nor can it be multiplied, but, unlike diamonds, it is divisible, homogeneous and therefore can be put together again. Gold never rusts.

20 m ∫17 Life is full of RISK

rend followers believe that there is a balance in life between risk and Treward. Life is full of risks. We are forced to accept that life is a game of opportunities. There is no way of avoiding having to make decisions.

But decisions entail risks. Hiding ‣‣ What does the competition translate into a computer code your money under the mattress is not look like? ‣‣ Back-testing and load-testing a solution. Buying a house? The house ‣‣ How high is the risk? to determine the sensitivity could burn down or the real estate ‣‣ How do we want to achieve success? of the trading parameters market could collapse. Investing in your and the ideal values own company? The company might go These questions also need to be ‣‣ Inclusion of diversification bankrupt and then you would lose your answered by a good trading system. and selection of instruments job and housing all at once. Buying an in the back-testing process investment fund? Pray that the hollow Many people believe that the amount ‣‣ Clear definition of volatility mantra of “buy and hold” works for you of risk is always directly proportional and return expectations and that you will not be to what we want to ‣‣ Maintaining a good partnership hit by a stock market achieve. But there is between investor and manager crash at age 65. “Only people that hope, because there ‣‣ But above all: Stick to your strategy! use their courage are two types of How should we to take advantage risk: Blind risk and deal with risk then? of opportunities calculated risk. The first We have to accept are rewarded.” one is suspicious. But that the market does calculated risk creates not reward stupidity over the long term. wealth, nations and empires. Calculated Only people who use their intelligence, risk and courageous visions go hand courage and resolution to take advantage in hand. Use your head, recognize of opportunities are rewarded. Think opportunities, work out things logically of your money from an economic and then move forward forcefully. standpoint. The objective is to let your Trend followers achieve success by capital work for you in the hope that it taking calculated risks. will multiply. The right decisions lead to success, the wrong ones to failure. These Trend followers do not questions should be answered in any think about what the markets good business plan: will do tomorrow. They can’t change events or predict the future. They ‣‣ Where are the opportunities just simply think like this. Generally, of my market niche? good risk management combines several ‣‣ What does our response to elements: market demands look like? ‣‣ How good are our chances? ‣‣ Make the trading and risk ‣‣ How can we earn money? management system clear to

Michael W. Covel

Michael Covel is the founder and CEO of Trend Following™ and knows all the major successful trend-following investment managers. For the past 10 years, Covel has been working as an expert consultant in trend-following matters for individual traders, hedge funds and banks. 18∫ One Mile Report

odern life rubs shoulders tokyowith the past on the streets M of Tokyo. Don’t be surprised to see locals, both young and old, dressed in the traditional kimono or yukata browsing through designer-name boutiques and high-tech shops. A global hub for fashion, technology and finance, Tsuchiya Hironori, Tokyo is a city that never sleeps. Superfund Japan A city of superlatives, Tokyo has the largest railway station in the world, servicing over two million passengers a day; the most photographed intersection in the world; and the world’s largest fish market. And since the Japanese love to go out to eat, the city has more than 400,000 restaurants and bars. The Michelin Guide reports that Tokyo has more star-rated restaurants than Paris, London and New York altogether. One Mile Report: Tokyo | FUTURE ∫19

20 Locations worldwide Superfund companies have offices around the globe, with prime city locations in Amsterdam, Chicago, Dubai, Frankfurt, Grenada, Hong Kong, Luxembourg, Milan, Monaco, Montevideo, New York, Paris, São Paulo, Singapore, Stockholm, Sydney, Tokyo, Warsaw, Vienna and Zurich. In this issue, FUTURE unveils the culinary delights of Tokyo. 20∫

Welcome to tokyo

TSUKIJI FISH MARKET

Tokyo has the largest seafood market in the world. The market is located in the ward of Tsukiji in the centre Tsukiji Honganji Temple, a Buddhist temple in the heart of Tokyo. of Tokyo and is a major attraction for Tokyo is located in the Kantō region in the region is the financial, industrial, commercial foreign tourists. In the inner market, eastern part of the Island of Honshū in Japan. and cultural center of Japan, boasting many there are daily auctions of fresh fish, The formerly insignificant fishing village of Edo universities, academies, research institutions, and the outer market is lined with shops has been the center of politics and government theatres and museums. Today, Tokyo is one that sell typical Japanese kitchen tools of the country since 1603. Tokyo has also been of the most fast-paced, modern cities of the as well as sushi restaurants offering the the official capital of Japan since 1868 and the world and stands alongside New York and delicacies of the Far East. The Tsukiji seat of the Tennō in the Imperial Palace. London as one of the top three global financial market employs around 60,000 to centers. With close ties to its Japanese 65,000 people and deals in more than Almost 10 million inhabitants live in the 23 traditions, Tokyo is also constantly setting new 400 different types of fish. wards of the city of Tokyo. Around 40 million trends in many areas such as in fashion and live in the urban agglomeration. This makes entertainment electronics. ‣‣ Tsukiji, Chuo-ku, Tokyo Tokyo the largest metropolis in the world. The ‣‣ Distance: approx. 1.2 km ‣‣ Price class

Map Tokyo – Love at first bite

Tokyo

Mile 1

Known around the world: Sushi – raw fish on rice One Mile Report: Tokyo | FUTURE ∫21

Ginza Kyubey Kazahana Kabuki-za Theater

In business ever since 1936, Ginza If you want to eat good food, you The Kabuki-za Theater near the Kyubey is one of the most famous have to aim high. Located on the 28th Superfund office is Tokyo’s leading restaurants in Tokyo and is well known floor of the Conrad Tokyo Hotel, the theater for traditional kabuki-drama by gourmands for the high quality of Kazahana Restaurant offers guests (Japanese dance). The theater was the sushi it serves. No trip to Japan is a magnificent view of the Royal founded in 1889 and is a unique display complete for Christian Baha without Hamarikyu Garden and the Rainbow of Japanese architecture. The only thing a visit to Ginza Kyubey, his favourite Bridge. A visit is a must for anyone going the building lacked was protection restaurant in Tokyo. The Superfund to Tokyo: The teppanyaki prepared by against natural disasters. In 1921, it founder and owner always orders the personal cook right in front of the was destroyed by fire and in 1923 “omakase” – a meal recommended by guest is a speciality of the house. And by an earthquake. There are plans to the chef. Ginza Kyubey is a welcoming the Japanese beef attracts diners from replace the theater with an earthquake- blend of traditional and modern far and wide. The elegant décor of the safe building in 2010. There are daily Japanese architecture; the friendly team Kazahana Restaurant is an expression of showings at Kabuki-za, and often of cooks work with their knives in full the motto of Kazahana: “Flowers in the separate matinee performances before view of the guests, demonstrating how Wind”. The restaurant is open for both the evening event. sushi is prepared. lunch and dinner. ‣‣ Minami-Azabu 3-5-40, ‣‣ Ginza 8-7-6, Chuo-ku, Tokyo ‣‣ 1-9-1 Higashi-Shinbashi, Minato-ku, Tokyo ‣‣ Distance: approx. 300 m Minato-ku, Tokyo ‣‣ Distance: approx. 3 km ‣‣ Price class ‣‣ Distance: approx. 800 m ‣‣ Price class ‣‣ Price class

Tokyo – Love at first bite

 Sushi is a Japanese dish that consists  Kaiseki refers to a snack meal that was mainly of cold, vinegared rice with either raw served at a Japanese tea ceremony. Today, or smoked fish and presented in appetizing the term refers to a special style of light bite-sized servings. meal served at a Japanese restaurant.

 Teppanyaki are meals cooked on a steel  Soba are thin brownish-gray noodles made griddle (teppan) directly at the table. In of buckwheat. Soba noodles are usually restaurants that serve teppanyaki, the served cold and in a separate bowl. The teppans are integrated into the preparation soup is served either cold or hot depending areas on the counters and built into the on the season and accompanied by a cup of diners‘ tables. different toppings and seasonings.

 Tempura is a method of preparing deep-  Udon are thick noodles made of wheat flour, fried battered food. Different types of meat, salt and water in a wide variety of widths fish, mushrooms and vegetables, as well as and shapes. As the noodles taste salty sprouts and leafy vegetables are dipped in a themselves, they are usually served with a mix of wheat flour, egg and ice water before relatively mildly seasoned soup. being fried quickly in hot oil. Kaiseki: A light menu 22∫ FUTURE | Interview: Senator Richard Shelby

exaggerated in doing so. For a while, they earned good money by working like this, then they wrote off huge sums that they securitized and sold as securities, and now, it is these securities that are crumbling.

In the light of this new world, what do you perceive your role to be as “I do a ranking member of the Banking Committee? NOT SEE THE LIGHT I believe that both parties must play a role. Senator Dodd and I both believe that the right thing to do would be to at the end of the tunnel.” implement a well-thought-out reform of the financial system. Hedge funds Senator Richard Shelby have always carried a risk and supplied liquidity to the market. And we need both. But if these products are too tightly regulated, then the regulators should also FUTURE: You voted against the USD 700 billion bailout package for the know this. We should not over-regulate, financial sector. Why? as the market needs a certain amount of risk. Senator Shelby: I voted against it on principle. I believe that nothing can be so big that it cannot fail. I have never believed this. When I was still a young congressman, I voted How much government is too against the Chrysler rescue package. These types of interventions hinder the market. much? Are you worried about knee-jerk type responses?

In fact, I do not believe in that type of It is clear to me that our financial system because they should be innovative. response at all. This is the worst type of carries systemic risk. This risk still exists. Nonetheless, we will have to reorganize legislation; the same kind that gave us The bailout has not solved the problem. our regulatory system. But we have to the Sarbanes-Oxley Act. It has brought It will cost us a lot more money before do it right. When products are brought too much regulation. In my opinion, it is over. We are talking about a sum of to the market, these have to be approved we should act cautiously and carefully, USD one trillion and more. by someone and this has to be backed by because otherwise we will destroy the capital. It will take years until we regain market instead of strengthening it. On Above all, if one adds the proposed trust throughout the world. the other hand, I believe that the times rescue package for the automobile of weak regulation are over, because industry … Is there light at the end of the people are afraid. They are nervous. Do tunnel? you know how high our government I am against it. I believe that these deficit will be this year? Around USD companies have already failed. General The problem with sub-prime securities one trillion. This is the largest deficit that Motors has lost USD 75bn in the past five has still not been solved. Many banking the world has ever known. And it might years. And Ford’s model doesn’t work. institutions are sitting on sub-prime become even larger. loans amounting to USD one trillion. The The liquidity crisis in the banking money that has been pumped into the That’s true. Taxpayers have not sector is having an effect on the rescue plans has not been able to solve grasped that some of the regulatory entire world. How will the interest the problem either. I do not see light at changes will have a negative effect rate curve develop in the coming the end of the tunnel. Can you see it? on their lives. years? Not at all. And the next thing to That is possible. If you are not careful The banking business is built on trust. topple could be the credit cards. when making regulatory changes, the What is lacking now is trust, because market could dry up. In the past, I always some people have not performed. You are completely right. It is the banks thought the market would take care of Basically, I do not believe in the merits own fault. They have lent enormous everything, and I still believe this. But of regulation. I do not believe it to be amounts to young people, people the government does not let the market right to over-regulate and tax companies, with doubtful creditworthiness – and do it. Richard Shelby Richard Shelby has been very busy in the past few months – thanks to the economic crisis. After the first crash in the banking industry and the collapse of the real estate sector, the US automobile industry is now toppling. The Senator from Alabama was critical, even then, that more cash would be burned for rescue schemes. He explains the magnitude of the financial disaster in an interview. 24∫ FUTURE | Interview: Senator Richard Shelby

I am concerned that Superfund Of course. But the average consumer Biography will be lumped in with the other will never have as much experience as investments viewed as very risky the people who work in this industry. even though the market for Therefore, they have to be informed. It managed futures is subject to will be necessary to explain it to people, stringent supervision and has because they have burned their fingers. performed very well with a number They are afraid and nervous. of educational measures. Is it also true for hedge funds that Your fears are well-founded. This is only the strong survive? precisely what is bothering me: Wrong regulation or overregulation. I therefore This is the nature of the market. For this hope that we will be wise enough and reason, I believe that the government brave enough. should stay out. But it won’t, it will  Richard Craig Shelby I believe that the “People are intervene.  Born: 6 May 1934, Birmingham, Alabama attitude towards nervous all over the  Republican Senator in Alabama hedge funds is world and are not What do you think so negative right spending money. They about the role now that anything are up to their ears of government that deviates from in debts. This is a bodies in the near Career the norm will ticking time bomb.” future? Shelby studied law at the University of be viewed with Alabama and worked from 1963 to 1978 apprehension. I believe that the as city prosecutor. In 1970, he was elected government should be like a kind of to the Alabama State Senate where he Hedge funds will not disappear. They are referee. It does not play in the game, but stayed until he was elected to the House not against the law. it makes sure that the game is played fairly. of Representatives of the US in 1978. He But now, the government is joining the was re-elected three times; in 1986 he won Neither should they be, because game. This makes me worried. Nobody the Democratic nomination for the Senate they feed liquidity to the markets. knows where this will lead. This is not seat and was re-elected in 1992. In 1994, Many of the best managers in the capitalism, but a type of social dirigisme, Shelby switched to the Republican party, world manage hedge funds. with the government playing the leading and was re-elected in 1998 and 2004 with a role. But when things get really tough, clear majority and is now a member, among They will attract investors, intelligent people have more trust in government others, of the powerful United States Senate investors, because they will be motivated than in the private sector. Committee on Appropriations. to perform, right? If one takes all of this into This is an attractive market consideration, isn’t it surprising Richard Shelby today for Superfund. Do you believe that the USD is still so strong and Shelby lives with his wife Annette Nevin that investors should consider gold is not doing even better? Shelby in Tuscaloosa, Alabama. They have alternative asset classes instead two sons, Richard Jr. and Claude. of putting their money only into Don’t you agree that it is partly a flight stocks and bonds? to safety after seeing what is happening

Rescuing the US economy

Save yourself if you can Money flows The Emergency Economic Stabilization Act The law that entered into force on 3 October (EESA) in the US, the law passed to stabilize 2008 states that the US Department of the the economy on 19 September 2008, is a set Treasury is permitted to buy so-called toxic of rescue measures presented by the Bush assets if the seller is a financial institution and administration to support the US financial meets certain criteria. The Treasury had USD market and includes schemes worth some USD 250bn at its disposal for purchasing toxic assets 700bn that are defined in detail in the support at the time the law entered into force. program for ailing assets. ∫25

Richard Shelby in an interview with Paul Wigdor (Superfund USA) at the office of the Senator.

in other countries? It is said that the intervened or had banking stocks Do you invest 100% for your German economy is slipping into depreciated. What does Superfund think customers? recession. You know about the oil price? what that means Due to the wide fluctuations on for Europe: When “When Germany If people start to many markets around the end of Germany gets a gets a cold, everybody panic, it could 2008, the system reduced many cold, everybody else else gets pneumonia.” drop even further. positions and the cash share in gets pneumonia. The We do not decide the portfolio is very high now. As strength of the USD if it goes up or soon as a clear trend emerges, the is based on declining commodity prices. down. We simply follow the trend. system will invest again. As usual, People are nervous and are not spending fully automatically and without money. A ticking time bomb. All of this is psychology, right? any emotions.

Let’s look at Japan. The Japanese Exactly. The herd mentality. We market has been stagnating for look for trends in more than over 27 years. 100 markets and invest in these irrespective of whether the trend And the government there has not is to move up or down.

Rescuing the US economy

Control To carry out the intentions of the law, a new authority was created: the Office of Financial Stability. At least 24 public officials will be employed here soon to coordinate the work of external financial service providers. It was the stipulation of US Secretary of the Treasury Henry Paulson to use the services of as many external experts as possible when purchasing the toxic assets. The capitol is the seat of the US Congress (legislative body of the US). The Congress is made up of the Senate and the House of Representatives; 535 representatives work there. uperfund News

ith Superfund offices in 20 locations around the world, Wthere is never a shortage of news to report. In addition, Superfund commitments extend beyond the world of finance to take in a wide variety of sports and cultural events. Here is the latest news from Superfund offices around the world.

Italy Switzerland Superfund Milan Off-Piste and personal with Bode Miller

S skiing sensation Bode Miller his career achievements and aspects of his Utook time out at the Dolder personal life. Notably impressed by his Grand Hotel in Zurich. Miller was own investment in Superfund funds, Bode the star guest at the Superfund made some interesting parallels between event which brought together some top-level skiing and the success of the 120 key customers, asset managers Superfund trading strategy. Afterwards, and institutional investors. he chatted freely with the guests at a relaxed stand-up dinner, happily signing The assembled bankers and managing autographs and posing for photographs, The new Superfund office in Milan directors of asset management companies until he left for the championship in Val were presented with an informative d‘Isere. The evening was a huge success, he Superfund global expansion inisght into managed futures strategies thanks to Bode Miller’s input as the guests Tprogramme has now reached before being introduced to the 2008 learned first-hand about the benefits of Italy. In 2008, Superfund SGR SpA overall world cup ski champion. Bode Superfund strategies in a relaxed and opened its first office in the centre spoke openly about his passion for skiing, informative atmosphere. of Milan.

A pioneer in the Italian market, Superfund SGR SpA is the first asset management company specializing in managed futures funds to launch in Italy. It is also the first entirely independent, privately-owned alternative investment company.

The aim of Superfund SGR SpA was to introduce the previously undiscovered asset class of managed futures funds to the Italian market, and to comprehensively explain the advantages of this strategy to potential clients. In order to meet domestic expectations, a new fund is currently being structured to cater exclusively to Italian investors.

Closeup of a superstar. Bode Miller with the staff of Superfund. Superfund News | FUTURE ∫27 Austria Going for gold at the gewinn fair Superfund Day 2008

The open-plan modern Superfund stand attracted a great many visitors. Drawing a crowd on Superfund Day: Presents, prizes and talks

n 2008, Superfund market games, Superfund he spotlight was on gift packages and talk shop IAustria once again Austria played host to the TSuperfund customers with Superfund investment made its mark at highlight of the three-day on 30th and 31st October experts in a relaxed, informal Austria’s most important investment fair by offering 2008, as Superfund setting. “Maintaining personal investment fair with two visitors the chance to pan for Austria hosted the fourth contacts with our customers eye-catching stands and real gold, under the guidance annual Superfund Day. is very important to us,” said a variety of innovative of a professional, to take Superfund Austria Managing interactive features. home as a souvenir. The event More than 2,500 investors Director Helmut Spitzer on proved extremely successful, gathered at the Investment the success of these customer Aside from the lively as shown by the enthusiasm Centers in Vienna, Linz, events. program of educational at the Superfund stand. Graz, Innsbruck and Schaan, presentations and stock to pick up their personal

Germany uperfund Germany in Superfund on tour Sthe fast lane: On the road with Friedhelm Busch.

Leading financial expert, Friedhelm Busch joined From left to right: Ronny Horst, Michael Harneit, and Superfund staff on a Friedhelm Busch hit the road in Germany. whistlestop tour of Germany to promote the new “Superfund Absolute Return 1” fund. The roadshow covered a wide range of high- profile events including the prestigious Mercedes Cup Tennis Tournament as well as a series of stock market Superfund Germany also adopted an open-plan stand concept which days which proved extremely The tour’s information events throughout Germany proved popular with visitors. popular with investors. were always packed with interested investors. 28∫ FUTURE | Superfund News And the WomEn’s World Award 2008 goes to … Ingrid Betancourt!

Former Federal Chanchellor of Austria, Alfred Gusenbauer, hands the Women’s World Award to Ingrid Betancourt at the gala event at Palais Coburg.

onour to whom honour is due. First held in the grip of kidnappers, now holding her million people worldwide via TV, printed media Hown award. Ingrid Betancourt was elected Woman of the Year 2008 as the first of 12 and radio. In Vienna, the special TV feature winners to be presented this year’s prestigious awards. was produced by John Cossette who was also responsible for the “Grammy Awards“: “Vienna On 26th October 2008, the Women’s six years in the jungle. She was freed in mid- is a great city and turned out to be an ideal place World Awards Organization presented 2008 as the result of a spectacular intervention for broadcasting the ceremony. We pooled the former presidential candidate of the by the military. Renate Brauner, the Finance all our know-how and created a Hollywood- Columbian Green Party with the Woman of Commissioner of the city of Vienna had worked standard show here in Austria.” The Year award for her work in promoting intensively during Betancourt’s time as a hostage democracy, freedom and tolerance at a campaigning for her release. The Background ceremony held in Vienna‘s Palais Coburg. In 2000, Nobel Peace Prize winner, Mikhail Ms. Betancourt was presented with the prize Hollywood in Vienna Gorbachev joined forces with Georg Kindel to by former Austrian Federal Chancellor Alfred Superfund has been the Presenting Partner of the found the World Awards – initially only for men, Gusenbauer. “Ingrid is a survivor of pointless Women’s World Awards since 2005. Following that worked towards promoting global peace terror and, at the same time, a messenger of successful events in Hamburg, Leipzig and New and tolerance. Mikhail Gorbachev: “Very soon, it hope for all those who still live and suffer in York, the 2009 Women’s World Awards were became clear to us that we needed a separate hopelessness.“ presented for the fourth time in Vienna. The award for women to celebrate their outstanding ceremony was followed by a gala dinner at the achievements.” And so the Women’s World Close to tears Vienna City Hall with award winners and guests Award was founded in 2004. Betancourt was clearly emotional during her from all over the world. The co-founder of the short stay in Vienna: “I feel very honoured and World Awards, Georg Kindel, summed up the Five years later, the awards have finally returned see this award as a call to action on behalf of event: “The Women’s World Award has taken to the place where the idea was first conceived – all people who are repressed against their will.“ the unique opportunity this time to address more Vienna. Watch out for extensive coverage in the Betancourt was kidnapped in 2002 by the people than ever before.” The last event in New next issue of FUTURE. Columbian FARC and held captive for more than York reached a potential audience of over 500 ∫29

Aristotle, Hedge funds and girls

WARNING This column does not represent the opinion of Superfund, its employees, its pets or of any other living being.

Larry Reno

The office in Sydney reflects Superfund’s philosophy: The spaciously designed offices In some areas of the world, Superfund is a privately offered and glass elements create an open working and communication space. investment fund. However in the US, Superfund is a regulated managed futures fund offered to the public. We are not a hedge fund! But try convincing anyone of that. It’s as hard as changing a dirty diaper on a screaming baby. AustraliaDown under is on top Sometimes I feel like the Greek philosophers when they tried to great deal is going It invests in a broad range of convince old world scholars that the world was round. Even after Aon in Australia. The short-, medium- and long- Aristotle endorsed the “round world” theory, many still wouldn’t believe Superfund office in the term strategies, and has a it. It’s often the same when it comes to managed futures. I can extol centre of Sydney officially low degree of correlation their benefits, and list the difference between managed futures funds launched in February with bonds, equities and and hedge funds until I’m out of breath and out of patience. And my with a cocktail event for securities. friends still respond, “You’re a hedge fund. I could lose all my money, investors and customers like my uncle Bob who lost his shirt trading corn.” although the office Matthias Gärtner, Managing had been open since Director of the Super Alpha Exasperated, I reply. “But we don’t trade in only one market. We trade September 2008. Seven Fund 1: “The fund offers an in over 100 markets worldwide, with strict stop loss limits. We’re also employees represent the ideal balance for a portfolio. highly regulated with full transparency and extensive risk management interests and products In good times, many investors procedures that are followed each and every day.” My friends just stare of Superfund, above all, forget the fundamental and say, “You’re a hedge fund. I could lose all my money.” And so it the local product, Super principle of diversification.” goes, in a never ending debate. “We’re a managed futures fund. You’re Alpha Fund 1 launched This is a clear reference to a hedge fund. The world is round. The world is flat.” on 3rd November 2008. Harry Markowitz’ portfolio theory. The four investments Finally, I try one last time to make my point by using the bottom line, The target groupfor the on which the fund is based hitting them where it hurts; their bank accounts. Smugly, I say, “Our Super Alpha Fund 1 is high cover various markets and flagship fund has averaged over 18% per year since inception. And in net worth private individuals different time periods 2008, when the stock market lost 40%, our funds performed very well and institutional investors. to guarantee maximum and yielded solid returns.” And they just stare at me, their lips sealed, Super Alpha Fund 1 is the diversification. while their unbelieving eyes say it all, “You’re a hedge fund. I could lose first of its kind in Australia. all my money.” Oh well. What can you do but keep trying? After all, I understand there are still people who think the world is flat.

But what does all this have to do with girls? One of the perceptions about hedge funds is that all of their managers are brilliant and most extremely rich. Now that’s a perception I’m willing to let stand. After all, to a potential date, what looks better? “I’m an aging, balding marketing guy for a managed futures fund?” Or, “I’m a ‘senior’ member of a global hedge fund?”

Hey, even us managed futures guys are pretty smart sometimes.

(Larry Reno’s opinion is solely his own opinion and does not represent the opinion of Superfund or of any of its related companies.) 30∫ FUTURE | Harry Markowitz meets Christian Baha High Noon in San Diego

duel, but only of words. Two well-known financial experts met in a San Diego Atelevision studio to hold an easy-going debate in relaxed surroundings. Christian Baha, founder and owner of Superfund, met with no less than Nobel Prize winner Professor Harry Markowitz, inventor of the timeless Modern Portfolio Theory which continues to inspire key strategists in the financial world.

FUTURE: Professor Markowitz, precisely for what we want to Harry Markowitz: The degree of risk your portfolio theory was written communicate to people: We rely on of a portfolio does not only depend on in 1952. Is it still relevant today? a non-correlated and therefore stable the risk of the individual factors, but also portfolio. and above all on when and how these rise Harry Markowitz: Of course it is. and fall. You need to look forward and OK, it is over half a century old, and this FUTURE: After 13 years of proven should not only look back at past price could lead one to believe it is not modern success for the Superfund trading trends. enough. But the system doesn’t change, strategy, most investors understand only the instruments and components what this means. Christian Baha: The good thing into which you can invest about the model is that the computer is are new such as Superfund Christian Baha: Managed independent of all predictions. funds or managed futures “Adding futures funds have yet to be funds. In 1938, John managed fully discovered. I estimate Harry Markowitz: Right. However, Burr-Williams wrote that futures can it will take at least another you shouldn’t necessarily only look at the risk is minimized if one work in 10 to 20 years for them to computer. You could say: OK, in the past, diversifies sufficiently. This any type of become firmly established. the performance was good on average. is true if you are referring portfolio to Then consider if you would apply this to independent, non- minimize It has yet to really sink in again to the future. The future is not as correlated investments. overall risk.” with people that there is an certain as the past! In 1952, I believed that investment type that works correlation should be taken better than bonds or similar Christian Baha: This is an even stronger into account. instruments. Better performance, lower argument in favor of managed futures risk, no correlation to other factors, funds that use a trend following strategy. FUTURE: Christian Baha, the a system that runs on its own, highly The trading systems don’t attempt to Superfund trading strategies liquid – where else can you find all of predict the future as many analysts try to are based on Harry Markowitz’s these features? do. They simply follow trends. findings. Why? FUTURE: How do Superfund funds Christian Baha: Because he stands work in a portfolio?

Professor Harry Markowitz

Harry Markowitz won the Nobel Prize for Economic Sciences in 1952 for his legendary portfolio theory. Today, his theory is the mainstay of all Superfund strategies. He spoke to Christian Baha in San Diego. The result was a very interesting interview on the many aspects of managed futures, the Superfund trading strategy and sound advice for investors.

32∫

In The Limelight

#1 Slip of the tongue

f you can laugh at yourself, you have a sense Iof humour. Which is universally appealing. Superfund USA is currently running a three- part series of TV commercials in the US that aim to provide information in an interesting way — served with a large portion of humor.

In the USA,companies selling managed futures are subject to a rigid set of legal conditions. For example, you are not permitted to mention performance figures and the products are not allowed to be explained – essentially, not much more than the company name and The first three spots show how the commercial is being filmed. how to contact it are permitted. Christian Baha delivers his lines about Superfund funds. A heavily-accented, wrongly pronouced word throws the director Even with such tight legal constraints, it is still off, due to his Austrian accent. possible to produce effective advertising spots for a strong product. Superfund USA took on this challenge Director: “Christian, it’s investor, not inwestor!” and positioned the founder and owner of Superfund, Christian Baha, as the central focus of the spots, linking The first spot establishes the company as belonging to him to the company name, the financial industry and the Christian Baha. Viewers remember the slip of the tongue and investment class of managed futures. the resulting comical situation which form the starting point for the second part of the series. Watch the spots online: www.superfund.com/tvspot In the Limelight | FUTURE ∫33

In The Limelight

#2 Passers-by #3 Managed Futures

The follow-up spot shows that people remember this slip of The third and final part of the trilogy picks up the thread of the the tongue. On the street and in elevators, random passersby second one. Once again, you see Christian Baha, but this time approach Christian Baha to explain the fine difference: “It’s in different everyday situations; walking in the park, reading a in‘v’estor, not in‘w’estor.” Baha reacts to this advice with a wry newspaper in a café or getting into a taxi. smile. All around him, people seem to be having the same This spot refers back to the joke in the first spot to emphasize conversation: “Have you thought about managed futures the tie to the financial world. At the end, Christian Baha poses yet?” This emphasises that the previous advertising spots are the question: “Have you thought about managed futures yet?” effective, as everyone is now talking about managed futures. 34∫ FUTURE | Superfund at the heart of europe

Markus Weigl Superfund at the heart of EUROPE uperfund has been invited to play a significant role in a new EU Committeen. STwenty-five European countries were screened to put forward one representative business each to join the Expert Group on Financial Education. The chosen companies were invited by the European Commission to find better ways of explaining financial matters to the European population.

Superfund was invited of work needed to be done broadcasts its own advertising  Born 28 February 1969 in to join the new European in Europe in this area. spot on the subject. Vienna Union Committee after being Particularly in the current  Weigl has been on the selected to represent Austria economic climate, as now The Expert Group on management board of from the financial sector. As more than ever, we need Financial Education will meet Superfund since the very a result,Markus Weigl, the to offer people in Europe twice a year in the next three beginning, over 13 years Superfund representative, is viable financial proposals years to present its findings ago. the only Austrian delegate in and solutions. Superfund has and recommendations to the the Expert Group. “We aim always been a leader in this EU Commission. “Irrespective to cooperate with domestic respect, by highlighting one of what we will be able financial institutions and possible path that can be taken to achieve in this group, introduce their proposals and using risk diversification. Superfund will continue to input to the Expert Group,” You only need to look at the focus on financial education said Weigl, on describing credit crisis or at the decline as part of its core business the role of Superfund as a of yen loans. People need activities by organizing representative. information here.” events for sales partners and customers as well as running The first meeting of this Above all, young people its own training program for 25-member Expert Group are encouraged to be more Superfund staff,” said Markus was held in Brussels on 7th actively involved in economic Weigl, clearly demonstrating October 2008. “We accepted matters. Lead countries in his long-term commitment this role because we believe this area are Great Britain, to education. that there is a huge amount and Ireland, which even ∫35

Questions to customers Franz Bayer, Superfund investor from Vienna

he opinion of investors is important. FUTURE invited Franz Bayer, an investor from important to me. The Superfund trading strategy TVienna, to share his views on investment. Find out why Superfund is the investment of has been able to deliver solid returns in both bad choice for him. stock market years and good ones – and so I trust the strategy implicitly. As a general rule, I Mr. Bayer, you have been investing in in regulated markets. Superfund funds invest in do not invest in funds that use short-selling and Superfund funds for many years. Why did more than 100 different highly liquid markets – borrowed capital. you choose Superfund in the first place? petroleum and gold, but also wheat and cotton, coffee and cocoa. This makes my portfolio much Were you anxious when many hedge funds I was looking for an investment that develops more broadly diversified and all trading positions ran into problems recently? independently of stocks and bonds over the are liquid at all times. long term. And Superfund funds clearly met this No. I have known Superfund funds for too requirement. Did Superfund funds continue to meet your long for this to bother me. I am well aware that expectations in 2008 as well? Superfund funds are managed futures funds What is the most important feature of an and have nothing to do with traditional hedge investment for you? Absolutely. I’d say that was the case: probably funds. more than ever in 2008. Superfund funds A clear strategy and a reliable fund manager. achieved above-average performance which What are your market expectations for Superfund funds have both. The trend following meant I avoided making losses in my overall 2009? strategy makes sense because of the simple portfolio. This was also the case in 2001 and logic behind it: There have always been trends in 2002. So you could say that the “Superfund The economy will not bounce back that fast and markets and there will always be trends. Using airbag” has come up trumps yet again in my repercussions from this financial crisis will be felt automated computer trading systems means I portfolio. on the stock markets for some time to come, as am confident that the strategy is executed in a well. Betting on rising prices is still too risky for consistent and disciplined way. What criteria do you use to select your me personally, because I expect to see several investments? years of constantly fluctuating markets. This is And what else? why I would rather rely on Superfund funds in I am actually rather a conservative investor. The order to be able to profit from rising, as well as I look for broad diversification and investment long-term success of an investment is particularly falling prices in the coming years. www.superfund.com

LEGAL DISCLAIMER The Superfund group of investment companies is a consortium of Commission. Only persons who qualify as professional investors In Australia this document is published by SuperAlphaFund Financial Pty affiliated entities that collectively provide the management, trading under the Securities and Futures Ordinance are eligible to apply for Ltd ACN 127 947 891 acting as an authorised representative of Columbus advisory, sales and marketing services for the managed futures funds shares of such funds. In Singapore, certain Superfund funds have Investment Services Limited ACN 106 064 644 AFSL 246943. that utilize the same Superfund brand systematic trend following been recognised by the Monetary Authority of Singapore as restricted strategy (collectively referred to as the “Superfund Group”). schemes. Accordingly, only institutional investors, accredited investors This information has been prepared without taking into account and other relevant persons (within the meaning of the Securities and anyone’s objectives, financial situation or needs so before acting on it Performance: Futures Act of Singapore) may be offered, and are eligible to apply for, consider its appropriateness to your circumstances. Past performance Any performance results shown in this publication are net of all fees. shares of such funds. Any offer made to an accredited investor or other is not a reliable indicator of future performance. All details concerning performance figures of Superfund Q-AG (closed relevant person in Singapore must be accompanied by an Information fund) serve exclusively as a historical presentation of the ability of the Memorandum. For the list of restricted schemes, please contact your In Australia investments can only be made by purchasing units in the trading managers of the Superfund Group. No subscriptions or follow- Superfund representative. Otherwise, funds managed by members Super Alpha Fund 1 ARSN 127 228 719 (Fund). This document does not up subscriptions are possible or will be accepted in these funds. Past of the Superfund Group not recognised by the Monetary Authority constitute an offer to sell or the solicitation of an offer to buy units in performance of any mentioned funds is not indicative of future returns of Singapore are available only to those who qualify as institutional the Fund. Units may only be purchased by completing an application of any Superfund products. investors as defined under the laws of Singapore. form attached to the product disclosure statement for the Fund dated 6 April 2009 (PDS). All information contained in this document is General: In Japan, only qualified institutional investors (as defined under the subject in its entirety to information contained in the PDS. If you are This publication serves solely as general information about certain laws of Japan) are eligible to apply for shares of funds managed by considering investing in the units in the Fund you should consider the investment providers and investments and may not be construed as members of the Superfund Group without solicitation in Japan pursuant Fund’s investment objectives, risks, charges and expenses carefully investment advice. The information contained herein does not constitute to an exemption and subject to resale restrictions. If any solicitation is before investing. This and other important information about the Fund a solicitation or offer to invest in any financial products. The financial conducted within Japan, a filing with the Financial Services Authority can be found in the PDS. You should carefully read all of the PDS before products mentioned in this publication are only admitted for public sale (FSA) is required before solicitation and other requirements for a private making an investment decision. or may only be advertised publicly in certain jurisdictions, where they placement to qualified individual investors must be satisfied. Absent the are subject to strict regulations. As of the date of publication, certain same, no persons other than qualified institutional investors are eligible All information contained herein has been compiled from external Superfund products are authorized or permitted to be sold publicly to to apply for shares of funds managed by members of the Superfund and internal sources deemed reliable and is accurate to the best of persons in the United States, Austria, Germany, Poland, Luxembourg, Group which are not registered with the Director of Kanto Local Finance publisher’s knowledge. However, there is no guarantee as to the Liechtenstein, Sweden, the Netherlands, Denmark and Japan, subject to Bureau of the Ministry of Finance. complete accuracy of all printed information and figures, including various conditions and limitations. Such products are not authorized for depictions. Estimations are based on opinions at the time of analysis. sale to the general public in any other jurisdiction. Subscriptions from Certain funds managed by members of the Superfund Group are Changes of these estimations are not required to be published. Any persons or entities in other jurisdictions will not be accepted unless currently not licensed for public offer and distribution in Switzerland liability for possible mistakes is hereby expressly excluded. such persons or entities fall under a specific exemption, or unless such and are therefore, subject to certain specific exemptions, not available subscriptions are otherwise permitted in accordance with applicable for purchase by persons domiciled or resident in Switzerland. Important notice: Financial products managed by members of the laws in those jurisdictions. No investment products are offered or sold Superfund Group are speculative investments. There is a substantial risk in any jurisdiction, or in any manner, in which an investment would Superfund Financial (Middle East) Ltd. is regulated by the Dubai of loss in trading futures and options. Drawdowns ranging approximately be contrary to the applicable securities laws or any other local laws Financial Services Authority (DFSA). from 20% to 30% regarding strategy A (Superfund Q-AG, closed fund), or regulations. Applications from persons who do not meet applicable from 30% to 40% regarding strategy B and from 40% to 50% regarding eligibility or suitability requirements will be refused. This document is strictly not intended for circulation to U.S. investors. strategy C can occur regularly, and drawdowns surpassing these figures In the Unites States, Quadriga Superfund LP and Superfund Gold, L.P. are possible. The possibility of a complete loss of the principal invested Funds managed by members of the Superfund Group are not available are registered with the Securities and Exchange Commission and is cannot be excluded. for subscription or purchase by persons resident in Hong Kong or available to certain U.S. investors that meet suitability requirements. THE AUTHOR AND DISTRIBUTORS OF THIS MATERIAL EXPRESSLY Singapore except under prescribed exemptions under the laws of No other products managed by members of the Superfund Group are DISCLAIM ANY AND ALL LIABILITY FOR ANY INACCURACIES CONTAINED those jurisdictions. In Hong Kong, funds managed by members of the available to U.S. investors. IN THIS DOCUMENT, AND SHALL NOT BE HELD LIABLE FOR THE SAME. Superfund Group are not authorized by the Securities and Futures