DG19 Credit Opportunity Fund

September 2020
FOR DISCUSSION PURPOSES ONLY
NOT AN OFFER, RECOMMENDATION, GENERAL SOLICITATION OR CONFIRMATION OF TERMS

For Discussion Purposes Only. Not An Offer, Recommendation, General Solicitation or Confirmation of Terms
Executive Summary: DG19 Credit Opportunity Fund
DG19 Credit Opportunity Fund

 The DG19 Credit Opportunity Fund is an actively managed bond fund investing in high yield issuers across Frontier and small-Emerging Markets.
 The fund’s mandate is global but has deep expertise investing in corporate and sovereign issuers from Eastern Europe, Middle East, Central Asia
and sub-Saharan Africa.
 The fund has an absolute return of 35% from inception in March 2016.
 The fund is owned and seeded by its founders. The founders make up the core management team, lead by portfolio manager Michael Workman.

Track Record Managing Capital Investors and Principals Aligned Key Fund Characteristics
The DG19 COF has a 4-year audited track record. It is The fund’s fee structure is transparent and
managed by an investment team with 25 years performance driven. Founders remain anchor  Target Gross Return: 10.00+% p.a
experience in emerging and frontier capital markets. investors and are actively involved in day-to-day
The owners began working together in 1997. management. DG19 focuses on total returns not  Strategy: Actively Managed Credit / No Leverage
asset aggregation.
 Liquidity: Monthly Redemptions / No Lockup
Global Footprint and Regulated Platform Fund Distribution Capacity
 Minimum investment: US$100 000
The DG19 COF fund and its investment manager (IM) are The DG19 COF is distributed in Switzerland and
regulated according to EU guidelines. The DG19 COF is is eligible to be distributed in EU and US  AUM (Avg.): US$11.0 – US$15.0 mln.
domiciled in Ireland (ICAV) and the IM is based in Jersey. markets. In Singapore, the fund is registered
The investment management and research team are with the Monetary Authority of Singapore  Fund Launch Date: March 2016
located in Moscow. (MAS).

Private Partnership Culture

DG19 is a boutique investment manager. Its operational
culture is flexible and practical. This is critical in fast
changing and fluid developing markets.
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For Discussion Purposes Only. Not An Offer, Recommendation, General Solicitation or Confirmation of Terms
Investment Strategy: DG19 Credit Opportunity Fund

Small EM and Frontier Market Credit Markets

 Active managers in emerging and frontier markets are regularly

presented with more compelling risk-adjusted opportunities when
compared to crowded developed markets.
EMEA and
Active
Global HY Bonds Beat Equities and Investment Grade Frontier
Management
Markets
 Global high yield debt as an asset class offers equity like returns and
regularly beats global equity indices when adjusted for volatility.
DG19 COF
Active Fund Management

 The DG19 COF is not index-constrained. It implements a high conviction

investment strategy which better fits developing markets. Bottom up
analysis coupled with macro-level knowledge is rewarded. High Yield
Corporate &
Commitment and Focus Sovereign
Debt
 DG19 COF founders launched the fund with their own capital. The
founders’ vision is to grow the business into a leading small-EM and
frontier investment asset manager.

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For Discussion Purposes Only. Not An Offer, Recommendation, General Solicitation or Confirmation of Terms
Global High Yield Debt Markets - Compelling Risk vs Reward

Global HY Bonds Offers Equity Like Returns… …With Notably Better Volatility Measures

180 35
Bloomberg Global HY Index Annualized Returns: +9.77% Bloomberg Global HY Index Average Volatility: 4.22
MSCI World Equity Index Annualized Returns: +16,69% MSCI World Equity Index Average Volatility : 13.81
30
140
25

Total Return, %
100

Volatility
20

15
60

10
20
5

-20 0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

MSCI World Equity Index Bloomberg Barclays Global High Yield

(MXWO Index) Total Return Index MSCI World Equity Index Bloomberg Global HY Index
(LG30TRUU Index) Volatility Volatility

* Source: Bloomberg (as of September-2020) 4

For Discussion Purposes Only. Not An Offer, Recommendation, General Solicitation or Confirmation of Terms
Frontier and Small-EM Debt: Top Global HY Asset Class

EM & Frontier Yield Curves – Noticeable Pick Up EM Yield vs Duration – Getting Paid to Own It
5 7% 160
6.2%
EM Sovereign
6% 140
4
Yield-to-Duration (RHS)
EM Corporates 120

Yield-to-Duration (bp/year)
5% Yield to Maturity (LHS) 4.6%
Yield to Maturity

Yield to Maturity
3 100
US Investment Grade
4%
80
2 3%
2.3% 60
1.9%
US Treasury 2%
1 40

1% 0.5% 20

0
3Y 4Y 5Y 6Y 7Y 8Y 9Y 10Y 12Y 15Y 20Y 0% 0
US Treasury US IG EM IG Corp EM HY Sov EM HY Corp

* Source: Bloomberg (as of September-2020) 5

For Discussion Purposes Only. Not An Offer, Recommendation, General Solicitation or Confirmation of Terms
Idea Generation & The Investment Process

Investment
300+ Issuers Recommendation

Sovereign & Corporate 100-150

Investment Universe Sovereigns /
• Own Research and Companies 50-75
Network Outstanding Securities
• New Issues
• Brokers / Sell Side Targeted List of
• Indices / ETFs Securities Watch List Final Selection

Idea Screening Idea Review Relative Value Analysis 20-50

• Issue Size > US$300mln • Sovereign Review • Absolute Return Specific Securities
• Liquidity/Bid-Ask Spreads • Business Review • Spread to Sector &
• Credit Analysis Benchmark
• Rating Trend • Bond Technicals
• Capital Structure
• Issuer Frequency • Company level • Security Specific
Issues
• Yield Target

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For Discussion Purposes Only. Not An Offer, Recommendation, General Solicitation or Confirmation of Terms
Position Monitoring and Portfolio Risk Management

DG19 Portfolio Characteristics

Positions (Min / Max): 5 (2016) / 18 (2019)
Portfolio Monitoring &&Risk
RiskReview
Review Cash Allocation (Min / Max): 5% (2017) / 65% (2020)
Portfolio Monitoring
Top Sectors: Energy, Metals/Mining, Govt, Banks
 Daily P/L Reports Currencies Owned : USD (>95%), EUR, RUB, GEL
 Weekly Position & Portfolio Review Avg. Duration: 3.5 years
 Stop Loss Price Average Coupon: 7%
 Target Exit Price Issuer Concentration: <10%
 Daily News Flow & Earnings Releases Avg. Credit Rating: B+
Security Types: Senior, Subordinated, Perpetual,
Convertible

Historical Countries of Corporate and Sovereign Risk

Eastern Europe Central Asia Middle East Africa Asia / Latam
• Russia • Kazakhstan • Saudi Arabia • South Africa Angola • China
• Belarus • Mongolia • Oman • Kenya Mozambique • Venezuela
• Ukraine • Tajikistan • Bahrain • Nigeria Zambia • Mexico
• Turkey • Ghana • Argentina
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For Discussion Purposes Only. Not An Offer, Recommendation, General Solicitation or Confirmation of Terms
Historical Performance and Overview: 2016 - 2020
Metals and Mining our
Top Pick. Reduced Energy
Recovery trade in “Fallen names. Largest Cash OW
Angels” from Turkey and Fed Raised Rates. Risk Off for 50
Mexico. Avg. BB-portfolio rating All Assets – S&P: -4.39% in
2018 / MSCI Global: -8.19%

40
In 1H 2018 EM Spreads
to UST at Lows. New
longs in Ukraine & South
OW Russian / CIS Oil Africa

Total Return, %
30
& Gas issues. Nigerian
private banks a top
performer in 2016
20

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DG19 Total Return Bloomberg Barclays Emerging Markets Bloomberg Barclays US Corporate
(Before Fund Costs and Fees) High Yield Index (BEBGTRUU Index) Total Return Index (LUACTRUU Index)

* Source: Bloomberg (as of September-2020) 8

For Discussion Purposes Only. Not An Offer, Recommendation, General Solicitation or Confirmation of Terms
Performance Overview and Key Statistics
Market Overview & Performance Summary - 2019
 We outperformed the Bloomberg EM HY Index by 200 bps with a 13,8% return in 2019. The DG19 COF Bloomberg Out-
2019
alpha was generated by an overweight in Sub-Saharan sovereigns (Nigeria, Kenya, Ghana) Total Return EM HY Index performance
where yields averaged almost 8% for the period. We benefitted from significant spread Total Return (%): +13.65 +11.48 +2.17
compression on our sovereign risk - spreads in these names tightened 180bps over the Volatility: 4.61 2.98
period. At its peak, we raised our overall sovereign holdings to 43%, however, managed to
stay clear of any Argentinian risk which defaulted yet again.

Market Overview & Performance Summary – 2018

DG19 COF Bloomberg Out-
 The Fed raised rates in Q3 2018 reversing our modest gains through July. We managed to 2018
Total Return EM HY Index performance
beat the index for the third year in a row (+44bps) by actively rebalancing to overweight CIS
countries during the year. We also moved further out the yield curve and extended the Total Return (%): -4.29 -4.73 +0.44
portfolio’s duration to 3,43 from 2,23. Our top picks in CIS space were corporates from Volatility: 3.21 3.25
Belarus and banks in Georgia. We were positive on banks throughout 2018 with our bank
exposure peaking at 25% across Mongolia, Russia, Nigeria and Ukraine.

Market Overview & Performance Summary - 2017 DG19 COF Bloomberg Out-
2017
Total Return EM HY Index performance
 The US presidential elections led to turbulence among high-grade EM sovereigns towards the
end of 2016/1H2017. We used this choppiness to overweight sovereigns and quasi-sovereigns Total Return (%): +11.14 +9.54 +1.60
in Turkey and Mexico helping to beat the index by +160 bps. At mid-year, our “fallen angels” Volatility: 2.40 2.29
strategy played out and we actively rebalanced the portfolio via the new issue market. We
added more than ten new geographies in 2017 including corporates from Kazakhstan,
Belarus, Zambia plus sovereign risk in Tajikistan and Bahrain.

Market Overview & Performance Summary - 2016 2016 (9 months) DG19 COF Bloomberg Out-
Total Return EM HY Index performance
 We launched the fund at the end of March 2016. Our largest exposures at the time were
in Eastern Europe and Central Asia. Our +259 bps outperformance of the Bloomberg HY EM Total Return (%): +14.27 +11.68 +2.59
Index was built on longs in Kazakh credits (they returned +32.92% for the year). Russian Volatility: 3.77 5.10
corporates were second best gaining +18.65% for the period. 9
For Discussion Purposes Only. Not An Offer, Recommendation, General Solicitation or Confirmation of Terms
DG19 COF Infrastructure and Service Providers

• The DG19 COF is EU Domiciled: Key DG19 Service Providers and Partners
–The DG19 Credit Opportunity Fund is an Ireland Domiciled
Investment Fund (ICAV - Irish Collective Asset-management
Vehicle)
REGULATORS CUSTODIAN (IRELAND)
–The fund operates according to the framework of the European
Alternative Investment Fund Managers Directive (AIFMD)

• DG19 Investment Manager is Fully Regulated:

DG19 PARTNERS (SWITZERLAND)
–The investment manager of the fund is DG19 Management
Limited - our wholly owned Jersey based investment company
–DG19 Management operates as a licensed fund services
business in accordance with the Jersey Financial Services
Commission (JFSC)

• We Have Stringent Reporting and Risk FUND ADMINISTRATOR

Management Requirements: ACCOUNTING

–The DG19 COF is subject to all reporting and monitoring

requirements of the Central Bank of Ireland and the JFSC
FUND LEGAL ADVISOR
• Service Providers Are Best in Class:
–Custodian: Societe Generale: EUR3,995 bln. assets under
custody, EUR585.0 bln. assets under administration. Named
Custodian of Year 2015 by Custody Risk Europe
–Fund Administrator: Maples Fund Services: MFS services >$50
billion of assets under administration, comprising 480 funds on
behalf of 236 clients

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For Discussion Purposes Only. Not An Offer, Recommendation, General Solicitation or Confirmation of Terms
Portfolio Manager DG19 Credit Opportunity Fund
Michael Workman
• Founder and Fund Manager of the DG19 Credit Opportunity Fund.
• Created , launched and responsible for the fund’s infrastructure and investment strategy. Manage day-to-day operations of the fund and
oversees investment research team.
• Member of DG19 Credit Opportunity Fund Investment Committee, Co-founder and Director of DG19 Investment Management Limited
(Jersey), the fund’s investment manager.
• Full Career History: www.linkedin/michaelworkman/

Goldman Sachs International:

• Executive Director in Goldman Sachs’ Moscow office. Responsible for Structured Principal Investments (SPI) in the Fixed Income Currencies and Commodities (FICC) division for Russia /
CIS. Benchmark transactions included proprietary investment of more than US$200mln in major EMEA financial institution.
• Senior fixed income analyst in Goldman Sachs’ European Credit Research team in GS London office. Top analyst for corporate and quasi-sovereign credits in EMEA and Latin America. Coverage
universe included high yield & investment grade issuers across multiple sectors. Member of European Credit Research team ranked best in Europe by Euromoney.

UBS AG:
• Head credit trader for EEMEA distressed and special situations in UBS Moscow office. Traded performing, defaulted and restructured bonds, bank loans and local currency fixed income instruments.
• Managed the bank’s EEMEA proprietary trading positions and responsible for making markets to support global flow trading.

Otkritie Capital,
• Managing director and head of US$ 1.0 billion fixed income portfolio and trading business in Moscow. Ran proprietary and client trading activities including team of salespeople and research analysts.
• Trading strategies included corporate and government, USD and local currency bonds across emerging and developed markets. Member of firm’s management committee responsible for fixed
income business in Russia and London.

Education: B.B.A from the University of Notre Dame with multiple degrees in Finance & Business Economics and Russian Language and Literature.

Additional Information: Featured speaker at investment forums about Emerging and Frontier Markets sponsored by Goldman Sachs, UBS, Citigroup, Renaissance Capital, Vedomosti, Bloomberg,
Emerging Markets Investor, Sachs Associates, Adam Smith and Euromoney.
Advisor to Sovereign Wealth Funds and global media companies relating to cross-border investments in sports and entertainment media properties in Russia / CIS.

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For Discussion Purposes Only. Not An Offer, Recommendation, General Solicitation or Confirmation of Terms
DG19 Investment Management Executive Team
▪ DG19 Group’s competitive advantage includes its deep rooted local presence in emerging and
DG19 Investment Professionals Have More frontier markets.
Than 25+ Years Experience in Global ▪ Unlike most money center asset managers, the DG19 executive team has worked on the ground in
Financial Markets local markets forming robust partnerships, information gathering networks and a unique
investment point of view.
▪ DG19 upholds best practices in regards to its operating environment, compliance, and risk
management procedures.

Jason Meads Ashley Le Feuvre

Bruce Gardner Director
Managing Director
Managing Principal
• Member of the DG19 Investment • Member of DG19 Investment Committee
• Co-Founder of DG19 Investment Manager. Overseas
Committee and Director of DG19 • Responsible for overseeing all fund related risk
the group’s business activities and strategic
Investment Manager
partnerships. management, compliance and regulatory
• Senior investment professional with more reporting.
• Track record of more than 25 years building,
than 17 years in fund advisory and asset
managing and exiting financial and development • Previously worked for Gartmore Fund
management .
businesses based in emerging markets. Managers as Head of Client Services
• Track record in managing complex
• Former partner and CFO of Renaissance Capital overseeing the servicing of more than 20
financings across major EU and Eastern
Group, a leading investment banking boutique mutual funds and 25,000 shareholders across
European markets. Senior advisor to Patron
focused on global markets. 100+ jurisdictions.
Capital, a leading investment manager with
• Launched and developed Renaissance Capital’s more than EUR4.0bln in AUM. • Worked for Maples Finance Jersey providing
asset management franchise. fiduciary services to hedge funds and private
• Extensive experience in transaction
origination and execution including special equity groups.
situations.
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For Discussion Purposes Only. Not An Offer, Recommendation, General Solicitation or Confirmation of Terms
Contacts

DG19 Management DG19 Credit Opportunity

Limited Fund
Fifth Floor, 37 Esplanade St Helier, Bloomberg: DG19COP ID Equity
Jersey, JE1 2TR ISIN: IE00BYYP9P64

Phone: +44 1534 500 400

Fax: +44 1534 500 450

contact@dg-19.com

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Disclaimer

This document has been produced for information purposes only.

In no circumstances should it be used or considered as an offer to sell or There are certain risks associated with investments in any private fund as,
solicit any offers to buy the fund or securities mentioned in it. Past for example, they can experience volatile results and an investor can lose
performance may not necessarily be repeated and is not a guarantee or some or all of his investment. The contents of this document are not to be
projection of future results. For more information and before making any distributed to third parties, nor will DG19 Management Ltd or the fund be
investment decision potential investors should read related documentation held responsible for any damage, direct cost or indirect cost deriving from
of the fund. References to specific investments or strategies are for the unauthorized distribution of this document or of its contents.
illustrative purposes only and are not intended to be and should not be
relied upon as a recommendation to purchase or sell particular investments
or engage in particular strategies.

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