GAA Q Fund

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GAA Q Fund
Global Asset Allocation Limited
in conjunction with
GAA Investment Funds Limited
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Global Asset Allocation Limited
Offshore Fund Management company based in Bermud
a Authorised by Bermuda Monetary Authority to p
rovide investment management services
Specialists in the development of innovative, ta
x efficient alternative investment strategies in
association with sister trust company, GAA
Investment Funds Limited, and others
Has raised close to USD 100,000,000 since 1996
For further information, visit http//www.g
aafunds.com
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GAA Investment Funds Limited Incorporated as an
umbrella trust company in accordance with
Bermuda law Authorised by Bermuda Monetary Auth
ority and Minister of Finance to issue funds in
accordance with Master Prospectus
Classified as a Bermuda Standard Scheme under th
e Bermuda Monetary Authority (Collective
Investment Scheme Classification) Regulations
1998 For further information, visit http//w
ww.gaafunds.com
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Your Security Fund Manager licensed by Bermuda
Monetary Authority Fund Company licensed by Be
rmuda Monetary Authority All investor subscript
ions and redemptions made via Custodian, HSBC
Fund share certificates issued to investors by H
SBC for and on behalf of GAA funds
All assets held and traded in name of HSBC for a
nd on behalf of GAA funds
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Your Security Funds valued independently by HS
BC each month Funds audited independently by De
loittes Touche Tohmatsu Board of directors inc
ludes 2 resident directors in Bermuda
All Fund prospectuses must be approved by Bermud
a Monetary Authority prior to Fund launch
All Funds employ licensed investment advisory te
ams 90 of funds raised by GAA to date received
via major institutions based on completed
satisfactory due diligence
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Wheres Bermuda?
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Wheres Bermuda?
Situated 774 miles of east coast of United
States Stable political and economic environment
since 1612 Self governing Dependent Territory of
UK
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KEY ISSUES
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KEY ISSUES
How much global data should a global equity
manager ANALYSE before selecting a stock for
purchase?
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KEY ISSUES
How much global data should a global equity
manager ANALYSE before selecting a stock for
purchase? How often should a Portfolio be REBALAN
CED?
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KEY ISSUES
How much global data should a global equity
manager ANALYSE before selecting a stock for
purchase? How often should a Portfolio be REBALAN
CED? Can investors AFFORD hands on discretionary
management?
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KEY ISSUES
How much global data should a global equity
manager ANALYSE before selecting a stock for
purchase? How often should a Portfolio be REBALAN
CED? Can investors AFFORD hands on discretionary
management? Dont investors deserve some PROTECTI
ON against falling markets?
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KEY ISSUES
How much global data should a global equity
manager ANALYSE before selecting a stock for
purchase? How often should a Portfolio be REBALAN
CED? Can investors AFFORD hands on discretionary
management? Dont investors deserve some PROTECTI
ON against falling markets? Can all of the above
issues be SOLVED in a structured, repeatable
manner?
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quant kwontnoun  (informal)
a highly paid computer specialist with a
degree in a quantitative science, employed by a
financial house, to predict the future price
movements of securities, commodities, currencies,
etc. ETYMOLOGY 20th Century from quantitative

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quant fund management Quant managers use
complex mathematical computer models developed
by scientists academics to identify and filter
specific sets of stock characteristics.
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quant fund management Quant managers use
complex mathematical computer models developed
by scientists academics to identify and filter
specific sets of stock characteristics.
Whole markets can be analysed daily for buy and
sell signals, allowing portfolios to consider
large volumes of information.  
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quant fund management Quant managers use
complex mathematical computer models developed
by scientists academics to identify and filter
specific sets of stock characteristics.
Whole markets can be analysed daily for buy and
sell signals, allowing portfolios to consider
large volumes of information.  Emotion and perso
nal biases that can hinder effective portfolio
management are eliminated, while allowing
insights into market inefficiencies to be applied
rapidly across a vast number of securities.
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moores law /morz law/ prov. The obser
vation that the logic density of silicon
integrated circuits has closely followed the
curve (bits per square inch) 2(t - 1962) where
t is time in years
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moores law /morz law/ prov. The obser
vation that the logic density of silicon
integrated circuits has closely followed the
curve (bits per square inch) 2(t - 1962) where
t is time in years that is, the amount of
information storable on a given amount of
silicon has roughly doubled every year since the
technology was invented.
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moores law /morz law/ prov. The obser
vation that the logic density of silicon
integrated circuits has closely followed the
curve (bits per square inch) 2(t - 1962) where
t is time in years that is, the amount of
information storable on a given amount of
silicon has roughly doubled every year since the
technology was invented. Gordon Moore, co-foun
der of Intel, first predicted the above more than
40 years ago
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The first three years of the 21st century
heralded stock market declines which caught many
global investors off guard
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The first three years of the 21st century
heralded stock market declines which caught many
global investors off guard
In general, traditional long only fund
management techniques suffer during periods of
prolonged contraction
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The MSCI World Index is STILL 1.87 lower than 6
years ago!
(1,313.21 vs 1,338.25 1 February 06 vs 1
February 00)
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and yet a number of markets / asset classes
appreciated over the period of decline
For example, Gold has gone from strength to
strength

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The danger, of course, of limiting investment to
a niche sector or specific asset class such as
Gold or Gold Mining Shares is that this may not
prove to be an attractive LONG TERM strategy
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The truth is that at in any given month SOME
stocks ALWAYS perform (even in falling markets)
but not necessarily the SAME stocks each month
A monthly reweighted portfolio of the top
global performing stocks would have achieved an
average return of more than 3-4 per month
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The real question, therefore, is this
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The real question, therefore, is this
Could the stocks which make up such a hypothetic
al portfolio be identified in advance?
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The answer could well lie within the
GAA Q Fund, a cutting edge fund which combines
mathematical quant theory with a rigorously
tested systematic stock selection and hedging pr
ocess.
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Overall Investment Objective To secure con
sistent and above average returns from a dynamic,
mathematical quant model which relies on the
structured repeatable processing and
interpretation of universal stock data to provide
a 30 day forward looking stock selection
forecast.
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How does the GAA Q Fund differ to other stock
selection models?
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How does the GAA Q Fund differ to other stock
selection models? There are number of criter
ia which are utilised within the GAA Q Fund st
ock selection process, some familiar and some ne
w.
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Data input
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Data input
GAAs Quant model analyses ALL relevant data
available on the complete universe of stocks.
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Data input
The GAA Quant model analyses ALL relevant data
available on the complete universe of stocks.
This requires significant computing power as wel
l as complete data on more than 38,000 stocks lis
ted on 52 global stock exchanges at any given
time.
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Data input
The GAA Quant model analyses ALL relevant data
available on the complete universe of stocks.
This requires significant computing power as wel
l as complete data on more than 38,000 stocks lis
ted on 50 global stock exchanges at any given
time. Thanks to Moores Law, computing power to
day allows us to run the models required for real
time quant data management.
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Data input
The costs inherent in such a programme are
significant
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Data input
The costs inherent in such a programme are
significant
Quant model development costs
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Data input
The costs inherent in such a programme are
significant Quant model development costs
Quant model maintenance and operational costs
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Data input
The costs inherent in such a programme are
significant Quant model development costs
Quant model maintenance and operational costs
the cost of real time global analytical data
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Data input Liquidity
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Data input Liquidity
Only mid to large cap stocks are selected for the
portfolio each month.
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Data input Liquidity
Only mid to large cap stocks are selected for the
portfolio each month. In January 2004, for exa
mple, 88 of the 98 stocks selected by the model
were capitalised at more than US100 million
each, whilst 49 were capitalised at more than
US1 billion.
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Data input Liquidity Dynamic stock selecti
on process
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Data input Liquidity Dynamic stock selecti
on process
By far the most important element of the
programme is the proprietary quant stock
selection process.
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Data input Liquidity Dynamic stock selecti
on process
By far the most important element of the
programme is the proprietary quant stock
selection process. The process was developed o
ver period of seven years by a team headed by a
former university lecturer with a Masters degree
(honours) in Computer Engineering, as well as
separate degrees in both Banking and Finance.
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Data input Liquidity Dynamic stock selecti
on process
No stock will be considered unless at least 4
independent stock reports are available for
consideration.

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Data input Liquidity Dynamic stock selecti
on process
No stock will be considered unless at least 4
independent stock reports are available for
consideration. Consequently more than 150,000
individual analyst opinions (38,000 x 4) could be
considered and incorporated into the stock
selection model each month.
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Data input Liquidity Dynamic stock selecti
on process
Monthly reweighting
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Data input Liquidity Dynamic stock selecti
on process
Monthly reweighting
The stock selection process is run continuously
resulting in the portfolio being completely
rebalanced every 30 days. There is no
correlation between the portfolio held one month
and that of the next. NO stocks are ever
automatically held across to the next month
unless they are reselected based on their own
fundamental merits.
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Data input Liquidity Dynamic stock selecti
on process
Monthly reweighting
On average 70 of stocks held are replaced each
month.
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Data input Liquidity Dynamic stock selecti
on process Monthly reweighting Maximum weigh
ting
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Data input Liquidity Dynamic stock selecti
on process Monthly reweighting Maximum weigh
ting
No single stock will account for more than 5 of
portfolio NAV no single country will make up
more than 30 of portfolio NAV
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Data input Liquidity Dynamic stock selecti
on process Monthly reweighting Maximum weigh
ting
Diversification
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Data input Liquidity Dynamic stock selecti
on process Monthly reweighting Maximum weigh
ting
Diversification
Typically 100 - 120 stocks are purchased each
month.

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Data input Liquidity Dynamic stock selecti
on process Monthly reweighting Maximum weigh
ting
Diversification Portfolio protection
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Data input Liquidity Dynamic stock selecti
on process Monthly reweighting Maximum weigh
ting
Diversification Portfolio protection
A unique hedging facility is employed to protect
the portfolio from sudden down turns in the market
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Dynamic stock selection process in more detail
Momentum factors The model takes into account bot
h historic and future forecasts with regards to
stock momentum
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Dynamic stock selection process in more detail
Momentum factors The model takes into account bot
h historic and future forecasts with regards to
stock momentum Analyst Revision FY1 FY2
(a minimum of four research reports must be
available) Change in Consensus Earnings 1 3
months of both FY1 FY2 Price Change last mo
nth
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Dynamic stock selection process in more detail
Momentum factors
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Dynamic stock selection process in more detail
Valuation factors The model takes into account bo
th current and future forecasts with regards to
stock valuation
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Dynamic stock selection process in more detail
Valuation factors The model takes into account bo
th current and future forecasts with regards to
stock valuation Earnings Growth
FY1 FY2 Forward Price Earnings Rat
io FY1 FY2 Price to Book Value F
Y1 Dividend Yield FY1
Price to Cash Earnings FY1 Price t
o Sales Ratio FY1 FY2 EBITDA Grow
th FY1 FY2
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Dynamic stock selection process in more detail
Valuation factors
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Dynamic stock selection process in more detail
Complete table with all factors in the total
universe
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Dynamic stock selection process in more detail
Factor weighting allocation process
The key to the success of the strategy is the
method used for assigning weightings to the
different factors.
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Dynamic stock selection process in more detail
Factor weighting allocation process
The key to the success of the strategy is the
method used for assigning weightings to the
different factors. Extensive back testing of
factors and cross factor combinations
Screening for market movement in the factors
for different time intervals
Optimisation of timing
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Dynamic stock selection process in more detail
Factor weighting allocation process
The result of this dynamic process is a monthly
listing of those stocks most likely to perform
over the next 30 days from a universe of more
than 38,000 worldwide
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Dynamic stock selection process in more detail
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Dynamic stock selection process in more detail
Factor weighting allocation process
As can be seen from this November 2003 snap shot,
9 of the top 10 stocks selected were listed in
different countries whilst 18 of the top 32 were
traded on different stock markets
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Dynamic stock selection process in more detail
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Dynamic stock selection process in more detail
The Quant model in action an actual example
HK listed Orient OS International was identified
as being a strong buy on 1 March 03. The model
re-selected this stock every month for the
following 7 months and thus it was retained
within the portfolio. It provided a net gain of
316 over this period
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Dynamic stock selection process in more detail
The Quant model in action an actual example
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Dynamic hedging facility in more detail
Protecting the Portfolio against adverse market
conditions
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Dynamic hedging facility in more detail
Protecting the Portfolio against adverse market
conditions The stocks chosen for purchase each mo
nth are rigorously filtered, and yet the stock
portfolio itself will always be long only.
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Dynamic hedging facility in more detail
Protecting the Portfolio against adverse market
conditions The stocks chosen for purchase each mo
nth are rigorously filtered, and yet the stock
portfolio itself will always be long only.
Although proven time and again to be able to sec
ure gains in both bull and bear markets, any
long only portfolio is subject to sudden and
unexpected drawdowns in the market economy
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Dynamic hedging facility in more detail
Protecting the Portfolio against adverse market
conditions To that end, the GAA Q Fund is prote
cted by a unique and dynamic hedging facility.
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Dynamic hedging facility in more detail
Protecting the Portfolio against adverse market
conditions To that end, the GAA Q Fund is prote
cted by a unique and dynamic hedging facility.
Treating the MSCI World Index as if it were a tr
illion dollar stock, the same rigorous standards
and methods of evaluation are applied to the MSCI
as are to the stocks themselves.
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Dynamic hedging facility in more detail
Protecting the Portfolio against adverse market
conditions Each month, the model sells the underl
ying component stock indices which make up the
MSCI World Index in order to protect the
portfolio in the event those markets fall
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Dynamic hedging facility in more detail
Protecting the Portfolio against adverse market
conditions Consequently the long only portfolio
always enjoys an element of protection against
the components of the MSCI from falling
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Dynamic hedging facility in more detail
Protecting the Portfolio against adverse market
conditions Consequently the long only portfolio
always enjoys an element of protection against
the components of the MSCI from falling
Every month the Fund sells 50 of the value of
the long only portfolio. If markets are deemed
to be unstable or listless, this is increased to
100 of the value, resulting in zero net exposure
to global stock market movements
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The Result?
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Portfolio returns which have consistently
produced positive gains and which have
outstripped all major global stock markets
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98 winning months out of 132 (74)
NB Uncompounded figures used in this back tested
graph are proforma and net of all management fees
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and significant out performance of the MSCI
NB Uncompounded figures used in this back tested
graph are proforma and net of all management fees
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The statistics speak for themselves
NB Uncompounded figures used in this back tested
graph are proforma and net of all management fees
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Real time performance since launch has been
impressive
2 May 2004 1 February 2006 44 gain net of
charges in 21 months!
NB Figures used in this graph are based on actual
NAV and are net of all management fees
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Corporate Strength Fund GAA Q Fund
Issued by GAA Investment Funds Limited,
Bermuda Fund Manager Global Asset Allocatio
n Limited, Bermuda Custodian HSBC, Hong Ko
ng Administrator HSBC, Hong Kong Auditor
Deloittes Touche Tohmatsu, HK
Legal Council Conyers Dill Pearman,
Bermuda HK Authority Bermuda Monetary Au
thority
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Key Features of GAA Q Fund GAA Q Fund off
ers quant style investment management
techniques normally only available to
institutional investors Zero cost of entry (100
allocation no bid/offer spread) combined with
disappearing redemption fee Low minimum initial
investment US25,000 Management fee of 1.75
performance fee of 10 of net new highs based on
high watermark
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Thank you!
www.gaafunds.com
Global Asset Allocation Limited
in conjunction with
GAA Investment Funds Limited
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This presentation does not constitute investm
ent advice specific to any one individual
investor and is not an offer to purchase the GAA
Q Fund (the Fund), which may only be bought
under the terms of the prospectus. The Fund is a
Class Fund of GAA Investment Funds Limited (the
Company), a Bermuda based mutual fund company.
The Company is an unregulated collective
investment scheme under the UK Financial Services
Act 1986, and therefore does not carry the
protection provided by the UK regulatory system.
This document is being issued by Global Asset Al
location Limited for information purposes only.
Changes in foreign exchange rates may have an
adverse effect on the price or value of the
investment. No representation is being made by
the Fund or its directors as to the accuracy or
completeness of the information contained in this
document. Past performance is not necessarily a
guide to the future. The value of the shares in
this Fund may fall as well as rise.
Returns are paid gross and tax may be due accord
ing to the residence or domicile of the investor.
Tax concessions are not guaranteed and may change
at any time their value will depend on
individual circumstances. It is the investors
responsibility to ensure that the making or
holding of an investment complies with any
restrictions or other provisions of any relevant
trust deed or any other regulations affecting the
investor.