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01.2018

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2011 2018 4 2018 6 2018 2017 10 08 01 2018 11 57 27 24 Start up nation 22 32 jan2018 indd 1

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08 01 2018 11 57 30 jan2018 indd 2

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2018 4 6 2017 2018 2018 2018 2017 10 12 14 RSM 16 The future of asset management David Shrugged David Spence Fair Oak Capital On movies and Hedge Funds 19 C dric Kohler Head of Advisory Fundana 21 TECHFUND 22 Start up nation 24 26 27 28 30 31 32 www bankautpratit co il 3 08 01 2018 11 57 33 jan2018 indd 3

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2017 2017 12 7 9 A A3 4 08 01 2018 11 57 35 3 5 3 8 15 12 17 164 2017 3 jan2018 indd 4

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s p s p 70 21 08 01 2018 11 57 36 5 jan2018 indd 5

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2018 2017 2017 6 5 2018 3 2 3 1 2017 2 2 12 2 2018 6 0 6 0 8 3 3 2 2017 2018 2018 0 4 2018 5 2018 6 5 7 4 2017 4 1 0 3 2018 2017 S P500 20 6 08 01 2018 11 57 36 jan2018 indd 6

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18 S P500 2018 11 35 21 15 stoxx600 2017 9 7 2017 35 2017 35 2017 35 2 90 20 Major Regions Figure 7102 26 1 25 MSCI FORWARD 91 P E 7 weekly Forward P E Capped at 20 Emerging Markets 12 2 25 20 20 EMU 14 6 Japan 14 6 UK 14 3 US 18 7 12 14 15 15 10 10 5 yardeni com 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 5 Price divided by 12 month forward consensus expected operating earnings per share Source Thomson Reuters I B E S Figure 2 30 FORWARD P E WORLD MSCI Forward P E 2 3 Page 3 December 19 2017 Global Index Briefing MSCI Forward P Es Yardeni Research Inc www yardeni com 2 75 2 6 30 25 25 All Country World 16 3 EAFE 15 0 Emerging Markets 12 2 US 18 7 20 20 12 14 15 15 10 10 5 yardeni com 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 5 Price divided by 12 month forward consensus expected operating earnings per share Monthly through December 2005 weekly thereafter Source Thomson Reuters I B E S 7 08 01 2018 11 57 37 jan2018 indd 7

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2018 2017 5 6 3 5 1 2 Barclays Capital Triple B rated Baa clo s 5 8 3 4 6 2017 1 2 1 2 1 56 66 2017 clo s Senior loans 8 08 01 2018 11 57 38 jan2018 indd 8

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WE ARE ONE PART HISTORY AND ONE PART FUTURE WHAT CAN WE DO FOR YOUR TOMORROW TODAY Discover our approach at juliusbaer com visionary thinking For a personal meeting please contact our representative office at 46 Rothschild Boulevard in Tel Aviv 972 3 60 39 111 Julius Baer is the leading Swiss private banking group and present in some 50 locations worldwide From Dubai Frankfurt Geneva Guernsey Hong Kong London Lugano Monaco Montevideo Moscow Mumbai Nassau Singapore Tel Aviv to Zurich head office The Tel Aviv Representative Office of Bank Julius Baer Co Ltd is supervised by the Swiss regulator and is not subject to the supervision of the Supervisor of Banks at the Bank of Israel 125Years_EN PrivateBankingMagazine 210x270 19122017 indd 1 jan2018 indd 9 20 12 17 16 19 08 01 2018 11 57 39

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2018 2017 2017 15 30 90 3 8 7 7 2014 2016 300 S P500 3 20 2018 2017 10 08 01 2018 11 57 40 jan2018 indd 10

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2017 3 2018 3 2019 ECB 2018 2019 2017 5 3 3 3 2 2 2 2 2 1 1 10 10 1 11 08 01 2018 11 57 41 jan2018 indd 11

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0200 0204 426 03 1 0 1 2 2 2 7 322 003 8 2000 608 2012 2016 0 1 15 3 1 3 125 4 4 0 9 500 2018 125 ISE Cyber Security Index 10 12 08 01 2018 11 57 42 jan2018 indd 12

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2 003 0206 125 ISE Cyber 2017 Security 02 13 08 01 2018 11 57 43 jan2018 indd 13

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5 6 4 6 7105 611 8 0 6 4 6 8 7 5 6 5 2017 400 1 7 share 2 Billions 2005 PPP and global 14 3 08 01 2018 11 57 44 jan2018 indd 14

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7 Billions 2005 PPP and global share 3 3 3 3 2017 18 19 5 5 5 2019 HIGH YIELD 15 08 01 2018 11 57 44 jan2018 indd 15

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RSM 12 2017 3 20 2003 OECD 12 2017 31 2019 31 12 2018 16 08 01 2018 11 57 45 jan2018 indd 16

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12 2017 31 2018 180 90 2 0 5 15 RSM RSM 17 08 01 2018 11 57 46 jan2018 indd 17

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without any in house biases Freedom to scour the market for superior product and freedom to conduct original research should encourage asset purchases fashioned by conviction untainted by attachment and bias Fees throughout the fund industry have been subject to increasing scrutiny Investors rightly demand that asset management firms design fee structures which are reasonable and which align their interest with those of their investors Independent specialists asset managers who tend to be focused on alternative or more complex strategies generally tick this box quite ably as a very significant part of their fees come from performance fees or carry rather than base management fees or other revenue lines Similarly partnership structures and employee ownership have the potential to ensure long term focus and alignment of interest with investors An independent specialist manager which fits the profile we have described above will benefit from the sponsorship of sophisticated investors institutional and private As a result good communication between investor and asset manager will be considered a vital competitive advantage and will be nurtured by the manager Investors are likely to benefit from regular and meaningful conversations with informed senior market savvy personnel as much as the manager will value input from investors about their market views challenges or opportunities and general long term objectives The benefits of the independent specialist asset management business model some of which were noted above have not escaped the attention of industry heavyweights Jack Inglis CEO of Alternative Investment Management Association AIMA suggests that entrepreneur led smaller asset managers are often the cradle of the industry s innovations being able to invest in niche markets without capacity concerns Inglis ventures further to add that Frequently they are among the industry s best performers Has Goliath killed David Readers may believe that at least in the context of our musings this has indeed been the case The number of new independent asset management firms being opened has slowed with several reasons being cited such as the recent increased burden of regulatory compliance or the lure of achieving economies of scale jan2018 indd 18 and an increased bottom line through M A activity 4 However this view will ignore a non trivial number of managers who by making a significant personal capital commitment leveraging new technologies and offering an attractive longterm professional opportunity to like minded professionals have managed to create this new breed of independent specialist firms These managers also see the regulatory overhaul implemented since the global financial crisis as a potential positive development generating a barrier of entry to less capitalised competitors and offering potential investors the benefits of a truly institutional platform able to support their operational requirements Investors who want to have the opportunity to work with independent specialists have reason for optimism Many of the teams who set up their stalls in pursuit of their desire to achieve professional fulfilment and performance for their investors are proving to have a strong case to remain We should expect fewer but stronger Davids David Spence has worked in financial services for over 20 years He spends his time undertaking Business Development duties for Fair Oaks Capital Fair Oaks Capital was launched in October 2013 In June 2014 Fair Oaks s inaugural fund was listed on the London Stock Exchange with a size of 114mm Today Fair Oaks Capital manages approximately 2bn of investors capital and has fifteen staff in its London and New York offices The firm is wholly owned by its principals Fair Oaks has a single business line asset management and there are no conflicting internal businesses 1 See for instance Why are Independent Asset Managers so Popular Investment Week September 22 2015 Independent Asset Managers Thrive in Crisis New York Times April 28 2013 or Boutique asset managers offer competitive advantages Investment News May 30 2010 2 See for instance Preqin s June 2017 Report Emerging Hedge Funds Can They Outperform where they analyzed 867 Emerging Manager Funds and 14 494 Total Hedge Funds Emerging Managers yield a 5 year annualized return of 12 2 relative to 7 7 of All Hedge Funds 3 According to McKinsey s February 2015 report The 64 trillion question Convergence in asset management Alternative assets hit a record high of 7 2 trillion in 2013 and the category had doubled in size since 2005 with global assets under management AUM growing at an annualized pace of 10 7 percent twice the rate of traditional investments 4 See for instance Emerging hedge fund managers challenges and solutions Hedgeweek September 23 2016 or The Critical Challenges For Emerging Hedge Fund Managers Hedge Fund Insight April 30 2017 18 08 01 2018 11 57 47

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David Spence Fair Oak Capital The future of asset management David Shrugged e of asset management David Shrugged t 16 pt mplex S Times Highlight The future of asset management David Shrugged Large multi line asset management firms have been getting bigger Large multi line asset management particularly very successful private equity firms have led since through mergers acquisitions asset gathering Large multi line asset management firms have beenmarketing getting biggerA firms haveand beenaggressive getting bigger through before the global financial crisis a significant consolidation process through mergers acquisitions and aggressive marketing A acquisitions andthat aggressive acquiring teams or organically expanding into other alternative recent study by Towersmergers Watson concluded the twentyasset gathering largest asset asset gathering marketing A recent suchasset as real estate corporate credit or direct lending recent study by Towers Watson concluded that theinvestments twenty largest management firms manage monstrous of the total and organic growth supported by very strong study byaTowers Watson41 9 concluded thatindustry s Consolidation management firms manage a monstrous 41 9 of the industry s total the twenty largest asset management marketing teams have created multi hundred billion managers AUM In a size obsessed asset management is big the only AUM In a size obsessed assetworld management is big the firms manage a monstrous 41 9 of the world focused ononly non traditional assets 3 beautiful industry s total AUM In a size obsessed beautiful The competitive advantages of independent specialist asset management world is big the managers only beautiful Specialist managers focus strong specialist teams on targeted investment areas This concentration limits AUM growth but Why focus on independent specialist asset managers facilitates faster reaction times and speed of execution when Why focus on independent specialist asset managers independent specialist market opportunities present themselves Independent specialists A number ofasset analysismanagers and research pieces have historically tried A number of analysis and research pieces have historically tried to assess the potential competitive also benefit from a larger relative investment universe and to assess the potential competitive advantages of independent advantages of independent managers versus those which are publicly listed may or owned by a specific 1 less competition as multi billion AUM funds compete for a limited managers versuscompany those which are equity publiclyfirm listed or owned by a bank insurance private or other multi business line financial conglomerates nalysis and research pieces have historically tried to assess the potential competitive number of large or scalable opportunities while fewer specialist specific bank insurance company private equity firm or other Similarly news articles and academic research have tried to identify potential competitive independent managers versus those which are publicly listed or owned by a specific 1 Similarly news managers can focus on niche areas or geographies with limited multi business line financial conglomerates advantages of specialist managers focused on specific segments of the investment universe vs 1 2 e company private firm or otherhave multi business line financial conglomerates generalist investors research articlesequity and academic tried to identify potential competition competitiveresearch advantages have of specialist focused on specificcompetitive s articles and academic triedmanagers to identify potential 2 segmentsfocused of the investment universe vs generalist The ownership and staffing of independent specialist firms specialist managers on specific segments of investors the investment universe vs Independent Specialist should also have positive consequences for their ability to be 2 stors Asset Asset innovative Consider that most specialists are owned and staffed by professional personnel who have considerable experience Manager Manager in larger firms and quite often a passion for investing in their chosen market without the constraints that size and a commercial Independent Specialist focus on AUM brings Correspondingly they will implement their Our interest in independent managers is thea result of recent changes in the market Asset and specialistAsset own tried and tested investment processes across the whole particularly the growth of multi strategy alternative managers Leading alternative investors firm and are free to refine and further develop them focusing on Manager particularly very Manager successful private equity firms have led since before the global financial crisis a performance rather than AUM growth significant consolidation process acquiring teams or organically expanding into other alternative investments such as real estate corporate credit or direct lending Consolidation and organic growth supported by very strong marketing teams have created multi hundred billion managers focused on by independent ownership can help an Freedom brought about non traditional assets3 asset manager unleash their skill Independent asset managers are independent and specialist managers is thea result of recent changes in the market Our interest in independent and specialist managers is the free to source investments from multiple external counterparties e growth of multi strategy alternative managers Leading alternative investors result of recent changes in the market particularly the growth of they usually do not have in house product created by internal 1 multi strategy ry successful private equity firms have led since before the global financial crisis athat22 alternative managers Leading alternative investors departments they may feel obliged to support Moreover See for instance Why are Independent Asset Managers so Popular Investment Week September 2015 Complex Independent Asset Managers Thrive in Crisis New York Times April 28 2013 or Boutique asset managers the asset manager can conduct his her investment research process acquiring teams or organically expanding into other alternative hsolidation U K offer competitive advantages Investment News May 30 2010 2 Complex uch as real estate corporate creditJune or2017 direct lending andOutperform organic growth 19 for See instance Preqin s Report EmergingConsolidation Hedge Funds Can They where they h U K analyzed 867teams Emerging Manager Funds and 14 494 Total Hedgebillion Funds Emerging Managers yield a 5 year very strong marketing have created multi hundred managers focused on annualized return of 12 2 relative to 7 7 of All Hedge Funds Complex 3 3 assets According to McKinsey s February 2015 report The 64 trillion question Convergence in asset hl U K Complex h U K management Alternative assets hit a record high of 7 2 trillion in 2013 and the category had doubled in size 2005 with global assets under management AUM growing at an annualized pace of 10 7 percent twice the rate of traditional investments since jan2018 indd 19 08 01 2018 11 57 48

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Suspense Who Will Take Home An Oscar Happy Ending Dare To Get Help What to do then to find the ten award winning managers amongst the ten thousand funds which are out there Our advice is for you to find an advisor but and that this the key word with a real track record in terms of performance In other words a person or a fund or an entity which can prove to you that they have real added value and that it is repeatable Unfortunately these advisors or managers are becoming scarce because Hedge Fund manager selection is simply very hard If prior to 2008 most advisors just provided access to Hedge Funds this is no longer enough given all the databases now available to pick managers Hedge Fund manager selection is hard because these managers performances are not stable through time and need to be dissected constantly How much of the return is coming from beta how much from alpha How much is coming from the long side and from the short side You systematically need to convince yourself that the advisor s performance is the result of a process i e skill and not of luck to ensure a repeatable process And this is just to name a few of the characteristics to carefully analyze But this should not be a surprise after all what is a Hedge Fund other than unconstrainted portfolio management To end up happy with your Hedge Fund allocation you need to clarify ex ante your objectives If most investors are looking for decorrelation one should note that this is not easy to obtain analyze and explain Monitoring how alpha is generated in a convertible arbitrage or volatility arbitrage strategy for example is just not that easy for every investor So why not start with a strategy which is more accessible that performs and where return sources are clearly identifiable The Equity Long Short strategy meets all of these criteria Even better today s market conditions are ripe for great returns in the strategy high equity market valuations risk of market correction good environment for stock picking At the end of August the HFRI Equity Hedge index was up 8 5 YTD HFRX 5 15 and the best Funds of Hedge Funds dedicated to this strategy were up about 10 YTD But again make no mistake There are about 5 000 Equity Long Short managers in the universe and the key is in finding the best ones remember the dispersion So to ensure a happy ending just like when going to the movie dare to get some help read the critics and look for an advisor Simplicity Liquidity Transparency Fundana is a Geneva based independent boutique which has specialized in Alternative Investments and Hedge Funds in particular for 25 years Fundana is an authorized Asset Manager of Collective Investments regulated by FINMA Our objectives are to find managers early to focus on the best to manage risks not just returns We strive to deliver solutions to our clients with a strong emphasis on simplicity liquidity and transparency 20 jan2018 indd 20 08 01 2018 11 57 50

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C dric Kohler Head of Advisory Fundana On movies and Hedge Funds Have you ever left the cinema utterly disappointed Despite the film starring your favorite actor it left you completely cold You were never convinced too conscious of the acting to immerse yourself in the story How many actors have gone through tough patches with little creativity or mojo Yet despite a significant difference between their best and worst performances you continue to go to their new movies right So the question is why should it be any different for your Hedge Fund allocation First Scene Dispersion Of Returns A LittleKnown Challenge We often hear from investors that Hedge Funds do not work That the returns of this asset class are no longer attractive and that the risks do not justify an investment Are these investors honest with themselves Many of them ignore a central feature of Hedge Funds the dispersion of returns The difference between the best and worst managers is huge and makes manager selection critical for a successful investment As can be seen from the chart below the difference between the best and the worst Hedge Fund managers is on average 47 per year This is more than twice that of traditional asset classes such as US Large Cap funds at 15 or US Small Cap funds at 20 In addition this dispersion is not stable through time and increases during and after crisis periods In other words even if your index finishes up in a given year your portfolio could generate a negative performance simply due to poor manager selection Even amongst investment professionals the size of this challenge is poorly recognized And so when someone tells you that Hedge Funds do not work I would bet you that implicitly he is talking about his poor manager selection Many think they can avoid that problem by just selecting the best performing funds over the last few years just like you select the next movie you will see because your favorite actor is in it But this ignores the fact that manager performance is also not stable through time This approach typically generates more deception than added value October 2017 Dispersion of Hedge Funds and US Long Only Funds returns Suspense Who Will Take Home An Oscar What to do then to find the ten award winning managers amongst the ten thousand funds which are out there Our advice is for you to find an advisor but and that this the key word with a real track record in terms of performance In other words a person or a fund or an entity which can prove to you that they have real added value and that it is repeatable Unfortunately these advisors or managers are becoming scarce because Hedge Fund manager selection is simply very hard If prior to 2008 most advisors just provided access to Hedge Funds this is no longer enough given all the databases now available to pick managers Hedge Fund manager selection is hard because these managers performances are not stable through time and need to be dissected constantly How much of the return is coming from beta how much from alpha How much is coming from the long side and from the short side You systematically need to convince yourself that the advisor s performance is the result of a process i e skill and not of luck to ensure a repeatable process And this is just to name a few of the characteristics to carefully analyze But this should not be a surprise after all what is a Hedge Fund other than unconstrainted portfolio management 21 1 2 ru e Ami L ullin C P 33 32 CH 121 1 Ge n ve 3 www fu ndan a ch T l 41 22 312 50 50 Fa x 41 22 3 1 2 50 40 fu ndam en tal fun dan a ch jan2018 indd 21 08 01 2018 11 57 52

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TECHFUND Start up nation mobileye Wix m systems Argos Start up nation start up 1 8 2011 2016 6 start up nation 35 125 30 0 1 20 20 22 08 01 2018 11 57 53 oversubscription Network IVC jan2018 indd 22

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5108501 FOREST 3B 5118674 20 80 FOREST 2B 5108519 FOREST 5125265 10 90 1B FOREST 5116629 FOREST 5106562 0A FOREST 1B 0A 1 info forest co il 054 6362270 052 6063601 Mutual Funds Integrity Research Performance BBB 14 05 2017 14 11 2016 FOREST 0A 25 0 1 2 10 3 30 50 A B 10 1 30 18 9 17 08 01 2018 11 57 53 jan2018 indd 23

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2017 21 100 24 08 01 2018 11 57 54 jan2018 indd 24

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3 Pick and choose 4 7 0 8 5 83 and choose 9 Pick 6 7

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MIT Cell 30 40 MIT DNA DNA MIT DNA Machine learning DNA 26 08 01 2018 11 57 56 jan2018 indd 26

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Nature Medicine UCLA 12 UCLA 30 1 500 27 08 01 2018 11 57 57 jan2018 indd 27

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Cartagena Cali San Andres Rio del Paraiso la macarena Serrania de la Macarena ca o cristales 28 08 01 2018 11 58 00 jan2018 indd 28

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100 20 Bandeja paisa Neiva Tatacoa www gilihaskin com 29 08 01 2018 11 58 03 jan2018 indd 29

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slow org il Maurice Denis Two Studies of a Nude Outdoors 1907 2017 7102 New Tech City No Mobile Phobia 2008 2015 New Tech City 30 08 01 2018 11 58 06 jan2018 indd 30

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10 16 2007 20 30 31 08 01 2018 11 58 07 jan2018 indd 31

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www podcasts finance inst co il 08 01 2018 11 58 13 jan2018 indd 34

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16 04 6397982 www somek winery co il 24 12 17 14 03 08 01 2018 11 58 14 Somek ad 21x27 indd 1 jan2018 indd 35

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2011 2011 2011 2017 2017 2017 12 CoCo CoCo 12 16 4 4 34 4 1616 24 24 34 34 2011 40 2017 4 34 10 190 14 22 www bankautpratit co il www bankautpratit co il 08 01 2018 11 58 25 jan2018 indd 36