StairsAN ALTERNATIVE INVESTMENT STRATEGY

Did you know?Did you know?Consistent compounding multiplies your capital manifold

At 20% CAGR, your capital grows five (5) times+ in 9 years (INR 100 grows to INR 516). In the last 9 years our program, STAIRS, has compounded*** at much higher rates.

A single year of negative returns sets your portfolio back significantly

Let us assume that the market averages a 20% return in a good year and loses 20% in bad years. One bad year after every two good years results in INR 100 growing to INR 153 at the end of 9 years.

Compare this to steady annual returns of 15%. INR 100 grows to INR 350 over the same period. STAIRS has not had a negative year since 2000***

With high levels of inflation, most real returns are actually negative

If inflation averages 8%, real returns on most instruments are at best marginally positive. In each of the last five years, STAIRS has returned upwards of 40%***

*Net performance return after all transaction costs but before performance fees..**SPOT refers to the underlying indices in the same proportion as the STAIRS constituents: viz 75% Nifty Futures (NF), 25% Bank Nifty Futures (BNF).***All returns prior to Jan 2010 are the result of a simulated backtest.

Are you grappling with the following Are you grappling with the following issues?issues?

Levels to enter / re-enter the market

What to buy Equity markets plagued by corporate governance issues Significant value destruction in many sectors eg. Real estate, infrastructure, capital

goods

Time to oversee your portfolio actively

No plan if trade goes wrong / adhering to a plan

Erratic portfolio performance particularly since Jan. 2008

The STAIRS strategy intends The STAIRS strategy intends to…to…

Provide absolute, real returns annually The strategy relies on price behaviour (trend following ; a subset of technical analysis) and not on fundamental research and analysis The strategy does not attempt to predict the market

Diversify your existing equity/debt portfolio The returns from this strategy are totally un-correlated to the market/underlying It diversifies your asset base from being “long only” as STAIRS is a long/short strategy

Provide protection to your overall portfolio in periods of stress

Managed FuturesManaged Futures

Managed Futures are a rapidly growing, globally recognized alternative investment class.

These programs are typically based on mechanical sets of entry and exit rules for trading any number of asset classes eg. equities/ commodities etc. The extent of risk and exposure per trade is controlled through “position sizing”. The client trades in their own brokerage account based on the advisors’ strategy.

Managed Futures asset allocation/diversification is now recommended as an integral part of any diversified, global portfolio. Typically, 10% - 20% allocation to this asset class is recommended as per best global practices.*

* See Appendix Growth of Global Managed Futures Assets as of CYQ32008 Global Managed Futures Assets as of CYQ32008

The number of winning trades versus the number of losing trades. Contrary to common perception, a large number of successful global traders average only around 45-60% winning trades. The STAIRS strategy has been averaging around 60%***

The average amount gained per winning trade vs given back per losing trade. A successful strategy must generate a significantly larger average gain per winning trade than the amount given back on a losing trade. Typically, this ratio is considered good above 1.5-2X. The STAIRS strategy has been averaging around 2.5X***

Risk management techniques such as position sizing are explained in the Appendix

Symbol #Wins #Losses Ratio

NF 229 169 1.36

BNF 130 79 1.65

Historical Performance StatisticsHistorical Performance Statistics

Symbol Avg. Win (pts)

Avg Loss (pts)

Ratio

NF 122 54 2.25

BNF 364 129 2.82

Symbol Largest Win (pts)

Largest Loss (pts)

NF 1011 231

BNF 2455 354Data for the period NF : 01.01.2001 to 08.10.2010BNF: 13.06.2005 to 07.10.2010***All returns prior to Jan 2010 are the result of a simulated backtest.

Tenets of successful trading systemsTenets of successful trading systems

STAIRSSTAIRS

STAIRS, our proprietary strategy, is a discretionary trading system which aims to generate absolute returns regardless of the market direction

The STAIRS strategy generates trades based on strict trend following rules. The strategy has been back tested on more than 10 years of historical market data.

The STAIRS strategy has been traded with capital since Jan 2010 and the strategy trades the Nifty futures on the NSE.

The STAIRS strategy intends to preserve capital by position sizing such that any one trade does not result in a loss bigger than 2% of the capital

The strategy generates both long and short trades and capital is invested at all times. However, the STAIRS strategy is not a day trading system. The strategy generates on average 10 to 15 trades a month.

STAIRS is not a black-box / algorithm driven system

*Net performance return after all transaction costs but before performance fees..**SPOT refers to the underlying indices in the same proportion as the STAIRS constituents: viz 75% Nifty Futures (NF), 25% Bank Nifty Futures (BNF).***All returns prior to Jan 2010 are the result of a simulated backtest.

STAIRS –STAIRS – Strategy FeaturesStrategy Features

Clients trade in their own NSE brokerage accounts.

Clients are free to stop/ exit the strategy at their own discretion

All gains accrue in clients own brokerage account

Live strategy performance is auto-updated at www.rohiniglobal.com.

Advisor fees based solely on performance; payable quarterly

Strategy advised by investment professionals with more than 30 years of combined market and trading experience.

STAIRS - RisksSTAIRS - Risks

Clients are advised to read all risk disclosure documents carefully. Derivatives are inherently risky and there is potential risk of loss of capital.

Risk is integral to trading in futures markets. There is always the risk of loss of capital. Superior returns are a function of this risk.

Risk however, is controllable and manageable in most situations. For instance, the maximum intra-quarter draw down on capital experienced from any profit point in our strategy till date is about 40%.

Positional risk in systematic trading is much lower than in conventional, directional trading due to position sizing.

Overnight Global event risk is the most significant risk to this strategy in line with any other positional strategy.

Risk of leverage. This is controlled to a large extent by using conservative leveraging of approximately 2X of the capital.

Risk of the “unknown”.

STAIRS – Performance during stress periodsSTAIRS – Performance during stress periods

The Global experience

% C

HA

NG

E%

CH

AN

GE

***All returns prior to Jan 2010 are the result of a simulated back test.

STAIRS – Quarterly PerformanceSTAIRS – Quarterly Performance

Year % Rtn

Q1 2007 17.60

Q2 2007 11.58

Q3 2007 1.14

Q4 2007 29.90

Q1 2008 14.85

Q2 2008 1.91

Q3 2008 39.97

Q4 2008 54.77

Q1 2009 13.93

Q2 2008 18.29

Q3 2009 59.45

Q4 2009 37.42

Q1 2010 14.01

Q2 2010 19.53

Q3 2010 12.94

Q4 2010 14.70

Year % Rtn

Q1 2011 8.26

Q2 2011 25.93

Q3 2011 23.73

Q4 2011 -4.59

Q1 2012 0.76%

Q2 2012 -7.48%

*Past performance is no guarantee of future performance.***All returns prior to Jan 2010 are the result of a simulated back test.

STAIRS – Annual PerformanceSTAIRS – Annual Performance

Year % Rtn

FY2007 60.22

FY2008 111.50

FY2009 129.09

FY2010 61.18

Year % Rtn

FY2011 52.41

*Past performance is no guarantee of future performance.***All returns prior to Jan 2010 are the result of a simulated back test.

Advisory Fee ScheduleAdvisory Fee Schedule

Performance based advisory fee at 30% of all gains, billed quarterly. Service Taxes are as applicable.

A “high watermark” as per international practices is used. (In negative return quarters, no fees will be billed. Fees will only be charged once all previous losses have been recovered).

QTR Quarterly Performance

Advisory Fee @30%*

Q1 09 +9% +2.7%

Q2 09 -12% NIL

Q3 09 +6% NIL

Q4 09 +12% +1.35%

Q1 10 +8% +2.4%

Sample Fee Chart (advisory fee paid quarterly)

RohiniGlobalRohiniGlobal

RohiniGlobal group of companies was founded in 1996. The group is committed to creating a program based, mechanical trading platform with the ultimate objective of providing diversification across major global markets and asset classes.

Professional advisory services are rendered by Rohini Online Services LLP, New Delhi, India.

Mr. Alok Jain is the founder of RohiniGlobal group of companiesHe has diverse trading experience in the Indian and the US equity markets with a majority of his research focused on technical system development and mechanical system modeling. He graduated from IIT Delhi (1991) and obtained the degrees of Master of Finance and an M.B.A. from the University of Maryland(1995). His successful trading career spans well over 15 years.

APPENDIX

Risk profile- single day returnsRisk profile- single day returns

The above picture shows the cumulative and one day returns of the STAIRS strategy over a 18 month period. The blue dots are the cumulative performance and the black line is the one day return. The figure indicates the nature of the equity curve as it gains ground after each drawdown in a “STAIRS” like formation. This picture alsoshows the overall performance of the strategy during and after a period of excessive volatility.

Clients are advised to read all risk disclosure documents carefully. Derivatives are inherently risky and there is potential risk of loss of capital.

Leverage and position sizingLeverage and position sizing

The National Stock Exchange determines the minimum margin permissible for each leveraged position/product. Under normal circumstances, the leverage permitted by the exchange, on an index futures product such as the Nifty is 6-9 times.

High leverage can be advantageous or extremely risky. A move in price of 15% against your position with 6 times leverage would wipe out your entire capital. To manage risk appropriately, we recommend using approximately 2-2.5 times leverage in the STAIRS strategy.

Position Sizing is a money management technique used to determine what size of position to take basis your absolute investment, as also the risk to be assumed per trade. We recommend that on capital of INR 25 lacs, a position size of INR 50 lacs should not be exceeded. It is our endeavor to never generate more than a 5% loss of capital on a single trade.

Money Management ensures that even after a string of losses, you have enough capital available to build back your investment with.

Portfolio diversification – global contextPortfolio diversification – global context

The Chicago Board of Trade's booklet, Managed Futures, Portfolio Diversification Opportunities, shows a portfolio with the greatest risk and least returns comprised of 50% stocks, 50% bonds, and 0% managed futures while a portfolio exhibiting the greatest returns and least risk, comprised 37.5% stocks, 37.5% bonds, and 25% managed futures. *Results obtained by adding managed futures component at an incremental rate of 1% while simultaneously reducing the stock and bond portions by 1% each. Based on monthly data from 1980-2004 on an annualized basis.1 Stocks: S&P 500 Index (dividends reinvested)2 Bonds: ML Domestic Master Bond index (over 1 year with coupons reinvested)3 Managed Futures : MAR CTA Index** Past performance is not necessarily indicative of future results.