Content

Takeaways From Other Projects
A.I.'s Ability to Solve These Issues
EDS Software Solution
Where EDS is Different
Tangible Client Benefits
How We Work
Two Client Work Examples

Takeaways From Other Projects

From our work with other investors, following challenges emerge:

Get more from less
- Can we make existing resources more efficient?
'Fat'-Tail Risk
- How can we manage down markets that hurt performance and can permanently impair capital?
Balancing risk and opportunities in their many forms
- How can we determine the 'right' trade-off for our investments?
Beyond attribution
- What drives a manager's investment and style?

EDS Software Solution - First of its Kind

EDS developed the first software to solve these problems

Where EDS Differs

EDS improves results across dozens of metrics at the same time

EDS Tech - Best Possible Mix

Cutting edge technology with focus on ease of interpretation

Tangible Benefits to Working With EDS

EDS analysis has made immediate improvements in 100% of cases

*Past performance is not a reliable indicator of future results

Completed 21 pilot projects

Working With EDS

EDS provides 3 possible partner collaborations:

Case Study 1

Portfolio Optimization

Overview

EDS was given a sample portfolio by a UK pension fund. Since only the asset weights were known, EDS tool deducted the investors' preferences and proceeded to analyze the holdings

The following preferences were deducted:

Main focus was return
Fees and volatility were less critical

Solution Using Client Universe

Universe included c.40 funds

EDS is expected to outperform existing allocation:

Higher expected return

Higher Sharpe Ratio

Lower volatility

Opening to External Funds

Expand possible investments beyond existing funds
- Preference remains for approved client funds
Limit each fund to 20%
Focus on same preferences as the original portfolio

Results - Risk/Return

EDS tool reviewed 2,743 potential U.K. funds

Original portfolio allocation shows good asset selection
Broader universe allows for more targeted risk taking
The average mixed allocation fund expects a 6.1% annual return with 13.8% S.D.

Results Overview - Funds

EDS recommended the following holdings

Each fund is capped at 20%
8 additions to original portfolio
Full flexibility around which funds and how many to include

Results Overview

Significant projected improvement using EDS tool

Higher expected return
- With lower standard deviation
Lower management fees

Higher dividend yield

Client approved funds comprise 68% of the total

Every metric can be flexed and adjusted depending on individual preferences

Actual Results Since Recommendation

EDS recommendation delivered superior results

*Past performance is not a reliable indicator of future results

Results Overview - Risk

Where do these gains come from?

Lower risk exposure across most metrics
Significantly improved factor risk exposure and risk distribution

Case Study 2

Exposure to China vs. downside risk

Overview

Goal: Modify a 60-40 equity-fixed income portfolio to adjust risk

We show how the software iterates through portfolios and provides different options, depending on Client preferences

The Client had several simultaneous goals:

Increase exposure to China

Maintain all other factors relatively stable

We assume Chinese benchmark has 0 tail risk

Results - Key Takeaways

The analysis can be done in reverse as well:
- We tested by how much tail risk would rise
- With a less "generic" initial portfolio, we could do the opposite
If desired, EDS software can increase hedge to China
Exposure to China and tail risk are clearly related
Each solution represents the best trade offs given these parameters
Results were analyzed using monthly data going back to 2005

Results

Increasing exposure to China increase tail risk by 2.7%

List of Funds for 3 Select Portfolios

Portfolio 11 had the highest expected return and standard deviation

Number of funds or desired minimum/maximum fund weight can be modified

List of Funds for 3 Select Portfolios

Portfolio 7 had the highest expected Sharpe Ratio

List of Funds for 3 Select Portfolios

Portfolio 1 had the highest exposure to China

Recommendations

Each portfolio represents optimal solution in its own right
The "best" portfolio depends entirely on client preferences
EDS believes that maximizing Sharpe Ratio is preferable, so would recommend portfolio #7

EDS advice based on the data:

Additional Examples

Finance
Big Data simulations
- Across any data-driven industry
- For risk management or forward projections

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Disclaimers

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this presentation, will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for an individual's portfolio.

Our projections are based on current market conditions which can vary over the coming months and weeks. Additionally, our projections are based on historical market behavior which may vary unexpectedly. Using Machine Learning, our tool should adjust to new market fluctuations but we might not be able to avoid short term volatility.

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