Investment Policy Script August 29, 2020

Slide 1
Good day, friends! I celebrate HERITAGE Day with you today.

A major function of financial management is planning and determining where, how and when to place
limited resources so they achieve the set goals. Whether this involves companies, enterprises,
businesses, or individual finances, investment will be crucial in helping you optimize your wealth. The
mere act of buying a car or deciding where to establish your home, or if you are working in the
company, knowing how your higher-ups allocate the companies’ cash and assets involves investment
decisions that will impact not only your station in life.

This is a brief discussion on investment policy to help us waddle through another aspect of financial
management.

Slide 2—Read

Risk is directly proportional to returns, i.e., the higher the risk, the higher the returns. Lower returns
entail lower risks. The key is to strike the optimum level of investment mix so that risk is acceptable for
the optimum returns.

Slide 3—Read

Slide 4—Investments are classified in many ways. They are categorized in terms of securities or
property.
Or they can be classified according to the investor’s point of view, whether the investor has a claim on
the business or whether he invest as part of a portfolio of an investment broker.

Slide 5

Investments can be classified in terms of a debt to the borrower—for example a company who uses the
funds, or as part owner of the business, or in the form of derivatives meaning he gets value from an
underlying asset. Without necessarily owning the asset.

Risks are also a way of view investments –so there are high-risk investments such as venture capital,
IPOs (initial public offerings), start-ups, or high-yielding bonds, or low-risk investments such as those
with fixed rates.

Slide 6
They can be classified in terms of short-term or long-term investments, foreign or local invesmtnets.

Slide 7
They can also be in terms of the kind of investors—whether the investor is an individual or individuals or
institutions. Typically institutional investors such as banks are sought for large amounts of money.
Slide 8
So we see the various forms of investment according to purpose. Investors who aim to gain from the
investment over the long haul may aim for growth investments such as stocks or mutual funds. They
can opt for equity ownership such as shares of stocks, or defensive investments which are low-risk.
They may invest in cash through simple deposits which yield a fixed rate.

Slide 9

Two major classifications are done based on guaranteed returns. Provident funds which are compulsory
government-imposed savings such as the one offered by the SSS.

Slide 9 These are examples of the various industries which one can invest in.

Slide 10 Investments can also be viewed in terms of accessibility. Traditional investments are accessible
to most, but as one reaches advanced financing operations, these become accessible to a few.
Alternative investments are accessible to selected investors.

Slide 11
This shows us the various types of alternative investments. This type of investment differs from the
common form in terms of complexity, operations, mode of fund management.
We have here private equity…(read)

Slide 12—Investors may want to support entrepreneurial talent in the belief that this will result in
capital gains.
Read

Slide 13—Investors of venture capital businesses include

Slide 14—For small businesses the available sources of investment are equity or loans.

Slide 15—Read Maor headings

Assess your organization’s profile, goals, vision, mission including its capabilities and position in the
market and contextualize this with the external situation.

Realign vision and mission of the organization with what society and the investment climate will be.
Clearly specify the company’s responsibility and direction in terms of how investments are connected
with the overall goals of the company.

Develop investment principles which should include doing due diligence by undertaking thorough
analysis of the various options and projects. After comparing cost and benefits, reviewing the projects
being considered with the investment criteria laid out by the company, undertake the process of
selection, communication with the stakeholders, monitoring and evaluation which must be done
regularly and ideal specified time.

Slide 16

Various aspects are considered in undertaking a financial plan.

Slide 17 Investment potentials are evaluated based on well-established methods.

Slides 18 to 19—Read

Slides 26 to 29

Slide 38 –Personal investments—annotate

1. Do I understand the business?

Can I explain what the business does? Do I understand how it makes money? What are its units
economics?

Why is the product valuable to the market? What makes it better than other alternatives.

Who are its competitors? Does this company have a sustainable competitive advantage?
2. Can I estimate the key financial characteristics 10 years out?
How will the market share change?
How will the company evolve? What is the reasonable range for future return on invested
capital?

3. Can the balance sheet withstand adversity?

Will the company be forced to declare bankruptcy if faced with severe recession? Does the
company have large debt maturities? What are the debt contracts on bank loans?
4. Is the management honest? Is the compensation structure fair to both the company and the
shareholders, its workers? Have I seen the management make sacrificial decisions which are
upright for the short-term but are beneficial on the long-term?
Is there transparency in the company when it comes to information that is relevant to the
overall stakeholders?
5. Is themanagtement competent?
What is the track record of the management team? Have they brought bak shares when the
stock was cheap or did they pass up on opportunities that were available and promising for the
company? Do they do their due diligence?
How does the company’s operating performance compare with other companies?
6. What fundamental developments would be responsible if this investment were to fail?
What are the biggest threats to the company?
What do the people say about the company?
 7. What evidence over time would confirm my observations? What data points do I want to see on
a regular basis?
8. What evidence over time would disconfirm my thesis? How much negative information is
relevant for me to determine its plausibility?
9. Does the valuation of the investment afford a margin of safety vs. my valuation?
What is the reasonable range of intrinsic value osf the business?

10. What is the opportunity costs of making this investment? What other benefits in other
investments would be lost? How does the risk/reward profile compare to the investment being
considere? What are the expected returns from both?

Slide 41—Other aspects of the investment that must be reviewed

Slide 42—Non-financial benefits

Slide 43—Investment books Titles

Slide 44 –20 Ideal investments in the Philippines

Slide—Fund Manager in the Philippines—If you are interested in dabbling in the stock market, mutual
funds, portfolio management, there is a list of fund managers accessible through this website.

Finally