The

Hutch Insights from the Top 50

Wealth Management Institutions

Report

Vol. 1
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March 2017 The Hutch Report Page 2 of 34

 What They Are Watching

Introduction 4
Central Banks & Monetary Policy 5
Government & Fiscal Policy 7
Inflation Outlook 9
Bonds 11
Equities 12
Currencies 16
Commodities 19
Real Estate 23
New Alternative Investments 26
Risk Outlook 29
Appendix 31

March 2017 The Hutch Report Page 3 of 34

INTRODUCTION
The goal of this report is to highlight how the smart money is looking at the markets for 2017 and
beyond. It is meant to provide a high level overview based on an aggregated synthesis of the
macro views of the worlds Top 50 largest wealth management institutions. The ultimate purpose
and benefit for the reader is to gain insight to the conclusions of some of the worlds smartest
wealth managers. This report is intended to be neutral and present the synthesis objectively and
enable the reader to draw their own conclusions in a fraction of the time it would take to
accomplish a complete analysis.

Recent reports estimate that the total number of client assets managed by the private banking
industry is USD20.6 trillion. These are high net worth individuals with fortunes having influence in
many industries and sectors across the globe. They are considered the smart money.

Being located in Switzerland, a recognized hub for Private Banking and large, smart money
flows, we are fortunate to have been able to draw from the views of active money managers. In
addition to these views, we have parsed through thousands of pages of macro economic and
strategic investment views from the Top 50 Wealth Management institutions in the world in order
to gain a better understanding of where these money flows are being concentrated.

This report is meant to be qualitative as opposed to quantitative, of which there are many. Those
that provide the latest industry analysis based on results and key performance indicators are
interesting to the participants to see how they stack up against their competition but do little to
help an investing individual understand what the smart money is thinking and the potential
direction that those large scale money flows may take.

Each business and economic cycle brings with it new variables and dynamics. We are in
uncharted territories in terms of monetary and fiscal policy as well as geo-politics, all of which are
inextricably intertwined elements that together will shape the global, national and local economies
in which we live in 2017 and beyond. Globally we are in a current environment of higher than
ever market valuations in the US, taut geopolitical tensions, uncertain government policies and
elections, aging demographics in developed markets, advances in industrial automation, robotics
and artificial intelligence and, what is turning out to be an atypical US presidency. Therefore, it is
important for investors to gain a deeper understanding of where large investments are being
concentrated in order to better protect their own investments.

With that in mind, we set out to research and analyze the various viewpoints and investment
perspectives from the Top 50 largest wealth management institutions in order to gain a better
perspective on how they see the present and future macro economic investing environment as
individuals and as a group, what they believe are the probabilities of an event happening, based
on the their common perspective and how to position their investments for it.

In this Private Wealth Management Report we have identified what this group of financial
advisors are thinking in terms of central bank monetary policy decisions, government fiscal policy
decisions, what sectors they believe will be impacted and where they believe are the safest
places to park the masses of wealth that they have under management. These high net worth
individuals are very risk averse and since a good offense is often based on the foundation of a
good defense, we also set out to identify what the smart money sees as potential risks.

As a result, this report provides a great overview of what may be substantial money flow to the
various asset classes which may or may not end-up comprising a good portion of the investment
portfolios of the clients of these institutions. This report should help you shape your own
decisions and risk evaluations.

March 2017 The Hutch Report Page 4 of 34

Central Banks & Monetary Policy
THE FED
Before 2008, the level of excess reserves held
in the US banking system was a mere $1.5
billion. These excess reserves are now at $2
As far as the US Federal Reserve is
trillion because of all the securities purchased
concerned, there is a clear consensus that
by the Federal Reserve, as part of their
the Fed is now prepared to hike rates
Quantitative Easing program. Add this to the
gradually. Where there is less agreement is
Quantitative Easing measures that have been
in the number of rate hikes expected to
employed by the European Central Bank, Bank
happen.
of Japan, and the Bank of England, and we find
ourselves in a situation where investment
40% of the 50 institutions indicated clearly
money managers now feel obligated to
that they believed the Fed would hike 2
decompose every word these Central Bankers
times, 25 bps each hike, in 2017, which
make, in hopes of gaining some additional
would bring the Fed Funds target rate to
insight into what their next move may be.
1.25%. Roughly 8% of the private wealth
Whatever the move, it will have a direct impact
management banks believe there will be 3
on a wide variety of investment options which
rate hikes. Exhibit 1 shows the historical
will impact the decisions of the smart money.
perspective of movements in the Fed Funds
rate.
Here we find our first important insight from the
smart money. There is a clear consensus that
the highly accommodative monetary policies
employed by all central banks with QE THE ECB
programs are seen as close to running their
course. It is also the consensus that other central
banks are expected to maintain a more
There is an agreement that the Peoples Bank accommodative stance, but shift away from
of China will continue to stimulate demand mechanical balance sheet expansion.
through adjustments of the reserve requirement Among those wealth management firms
ratio (the amount of money that the banks must sharing their views on the European Central
hold as reserves). However it is clear that all Bank, it was unanimous among them, with
eyes are on the Fed and the ECB. the exception of one, that the ECB would
begin to taper beginning the 2nd half of
2017. The one dissenter had the view that
the ECB will not be able to discontinue their
QE program.

The Smart Money View

The US Federal Reserve is seen to begin hiking interest rates at a gradual pace.
Average expectations is for 2 rate hikes of 25 basis points.
ECB is expected to begin tapering in the 2nd half of 2017.
All Central Bank monetary stimulus policies are starting to weaken.

March 2017 The Hutch Report Page 5 of 34

 US Fed Funds Rate Historical

EXHIBIT 1 - The current US Fed Funds rate is at .75%. Shaded grey areas indicate recessions.

EU Interest Rate vs. US Fed Funds Rate

EXHIBIT 2 - The Fed began tightening rates in December 2016 reversing their 8 year policy of easing,
whereas the ECB has yet to taper.

March 2017 The Hutch Report Page 6 of 34

Government & Fiscal Policy
01 US
The US Presidential Election has been the
main talking point amongst all the top 50
private wealth management firms. The
Trump candidacy created a large amount of
uncertainty and along with it, increased
concern among private wealth asset
managers.
After the Trump win, asset managers
suddenly became bullish regarding his
promises of expansionary fiscal policy, tax
cuts, repatriation of foreign US earningsand
higher public spending. The pledge to invest
1 trillion USD in American infrastructure over
the coming decade has been deemed a
potential boost to US GDP.
With a Republican majority in both houses of
Congress, it is believed that Trump will have
latitude to push through his programs.
02 EUROZONE
The general view is that although anti-EU
sentiment and populist sentiment is rising in
Europe, it will be mitigated and votes to exit the
EU will most likely not extend past the UK.
Having shrugged off the Brexit verdict, the
consensus among the private wealth
institutions is now that the EU will experience a
moderate recovery and is set to continue at
steady pace.
Changes in policies, particularly migration/
people movement policies may develop if there
is further traction gained by populist factions in
the upcoming elections which can lead to the
longer term destabilization of Europe. For this
reason, the view is that in comparison US
equities are preferred over EU stocks.

The short term view amongst 100% of the

wealth management institutions is that this
situation is very bullish, however not without
some caveats for the longer term. Along with
the promises of a growing economy, there is
concern that this will lead to greater
inflationary pressure and with it increased
volatility in the markets. In addition to that,
there is also worry regarding the increase in
populism and protectionist ideals.

The Smart Money View

The EU will experience a modest recovery.

The amount of political risk in the short term is a cause for
concern.

The Smart Money View

It is very difficult not to reach the conclusion that Donald Trumps
reflationary agenda will nudge up growth, inflation and the US dollar
and generally be positive for equities, especially US domestic
companies. - UBS

March 2017 The Hutch Report Page 7 of 34

 03 EMERGING MARKETS
It is seen that the US trade policies will have an impact on emerging markets. The impacts would
mostly be related to two things; capital outflow and US interest rates. If capital from the US is re-
directed mostly back to the US this would reduce the amount of US dollar in circulation outside
the US and also US dollar denominated investments in emerging markets.

Secondly if the value of the US dollar rises along with a rise in US interest rates, this would be
seen as a direct threat to US dollar denominated debt held by many emerging markets. Both
governments and corporations had previously taken advantage of low cost dollar denominated
debt, which would now potentially start to become more expensive to service.

Countries deemed to be particularly impacted would be the likes of Mexico and Brazil. Currently
80% of Mexicos exports are to the US. In addition, Mexico has direct exposure to the US dollar
via remittances. There are billions of dollars in remittances sent to Mexico from the US each
month. Indonesia, Turkey, and South Africa are also markets that are generally deemed to also
be amongst the most fragile and strongly impacted by a rising US dollar. The majority view, and
where most of the private wealth managers seem to agree, is that higher GDP growth is to be
expected in BRICs emerging markets (Brazil, Russia, India and China), and particularly many
countries in Africa.

Another core question among our list of participants is whether China can continue along its
current growth trajectory. While GDP growth remains strong in China, the consensus is that
China is not a short term problem but could be a problem in the medium term and should be
monitored. Gradual slowing of the Chinese economy is expected over the next few years.

04 JAPAN
Roughly 80% of the top 50 wealth management institutions believe that recent data paints the
Japanese economy in a positive light and although they expect the growth to be slow, they do
expect the economy to continue to grow.

In addition to continued support of the Japanese economy on behalf of the Bank of Japan and
Japanese fiscal policies, the US President-elect Trumps economic policy could unexpectedly be
a fresh additional tailwind for Abenomics, by bringing about a weaker Japanese Yen, thereby
boosting the Japanese economy.

Although the majority feel US policies will help drive the Yen lower, about 20% felt that the post
US election uncertainty could actually drive the Yen higher, thereby creating headwinds for the
Japanese economy.

The Smart Money View

Japan will grow but at a slow pace, driven by exports

Majority feel that Trump policies that help drive up the USD will help
weaken the Yen and strengthen the Japanese economy.

March 2017 The Hutch Report Page 8 of 34

 A read through any of the macroeconomics outlooks makes it clear that inflation
dynamics are highly complex. The general view is that, at least for the first half
Inflation Outlook
of 2017, there will be inflation in the developed markets but it is expected that
the deflationary measures anticipated to be taken by central banks and
governments will keep the inflation levels in check. Whether the central banks
can control inflation following all of the reflationary measures they have
undertaken is a large question mark and it remains to be seen if fiscal policy
(e.g. tax cuts and government spending) can be implemented to pick up where
monetary policy falls short.

Geo-political influences such as populist versus global movements may also

influence inflation. Potential government policies to restrict immigration are
seen as a growth dampener, and this dampening, depending on the success of
populist agendas may lead to an amplification of inflation. It is generally
anticipated that initially inflation will be more headline, particularly energy and
oil related, and lesser so core inflation.

Industry automation, robotics and artificial intelligence are viewed to be

deflationary as deployment of these technologies can bring down costs. The
impact of these technologies remains to be seen in 2017 however there is no
debate that their impact will only increase in the future.

The general consensus view is that inflation will be rising in moderation in the
US and the Eurozone and rising moderately but a bit higher in the UK and low
or decreasing in China and Japan.

The general expectation for the US is moderate inflation, which may be felt
more in the latter half of 2017, and start of 2018 subject to government trade
and fiscal policy approval and their timeline for coming into effect.

Some of the reports we have analyzed predict falling prices in India and Brazil,
whereas other reports predict an increase in inflation in both of these countries.
Therefore, no clear consensus. It is anticipated, however, that central banks in
Asia will probably not raise interest rates to defend their currencies.

Factors to watch closely in 2017 related to inflation will be monetary policies,

central bank stimulus (particularly the ECB and whether or not they start to
taper), central bank interest rate hikes or cuts, quantitative easing and asset
buying.

The Smart Money View

Inflation will increase slightly in developed markets but it is anticipated to be kept

in check either through continued central bank intervention or fiscal policy.
Inflation may be higher in Asia subject to less Asian central bank intervention.

March 2017 The Hutch Report Page 9 of 34

 The Inflation Trade

Treasury Inflation Protected Securities

Protection against a rise in inflation can be done by purchasing the ETF - TIP. The investment seeks to track
the investment results of Bloomberg Barclays U.S. Treasury Inflation Protected Securities (TIPS) Index
(Series-L) which is composed of inflation-protected U.S. Treasury bonds.

EXHIBIT 3 - TIP Weekly chart. Note: This etf pays a dividend of 1.46%.

Information regarding the use of TIPs

Treasury inflation protected securities (TIPS) refer to a treasury security that is indexed to
inflation in order to protect investors from the negative effects of inflation. TIPS are considered
an extremely low-risk investment since they are backed by the U.S. government and because
the par value rises with inflation, as measured by the Consumer Price Index, while the interest
rate remains fixed. Their advantage is mainly inflation protection, but if inflation is minimal or
nonexistent, their utility decreases.

U.S. Inflation Rose 0.6% In January/2017, the largest Increase In fouryears however, its
important to keep in mind that while the latest $7 billion offering of 30-year TIPS featured the
highest yield in roughly a year, the 0.923% yield is still quite small.

March 2017 The Hutch Report Page 10 of 34

 Bonds
When talking about bonds and fixed income, there is a clear consensus on the state of

US GOVERNMENT
the market. There has been a 35-year bull market in US Treasury bonds and the belief is
that it is at risk. The wealth management participants believe that the US Trump
presidency could turn out to be the trigger, unleashing forces long in the making.
The historical experiment of quantitative easing in the US, Europe and Japan has seen
unprecedented buying of bonds, driving yields down to historic lows. However, with the
European Central Bank (ECB) and Bank of Japan (BOJ) running out of bonds to buy and
facing the unintended adverse consequences of negative rates (for banks and insurers),

CORPORATE
2017 could be the final year for quantitative easing and negative rates. Political resistance
to fiscal expansion will weaken, particularly in Japan. Therefore, the consensus is there is
nowhere for yields to go but up. The most recent estimates showed that there are
currently roughly $9.6 trillion of bonds trading in negative territory.

The combination of a historically low interest rate base and the Feds bias towards raising
their interest rate target creates a challenging backdrop for traditional bond categories. It

HIGH YIELD
is probably for this reason, that we have not identified any clear trade among our fixed
income wealth managers. The choice between, short and long duration, developed
sovereign,high yield bonds USD bonds,emerging markets local currency, investment
grade corporate or municipal bonds is complex and influenced by many forces.

The clear message is that given that the central banks have been ever focused on
generating inflation in addition to the increased political risk around the world that
there is little margin for error in bond markets.

SOVEREIGN
The take away from our analysis is simply that, among the top 50 wealth management
institutions, the risk/reward of investing in the bond and fixed income markets is rapidly
deteriorating.

It is not necessary for the average investor to partake in the hunt for yield, especially
when yields are at historic lows, however there are ways to take advantage of a declining
bond market.

EMERGING MARKETS Short 20yr Bonds

This can be done by
purchasing the ETF - TBT.
This ETF follows the ICE U.S.
Treasury 20+ Year Bond

MUNICIPALS Index and will increase on any

decline in that market.

Note: Please read the

appendix for more
information regarding these
ETFs.

EXHIBIT 4 - TBT Weekly, Note: The index hit a historic low of $29.45 on July 3, 2016

March 2017 The Hutch Report Page 11 of 34

Equities
GLOBAL OVERVIEW
Despite the consensus of high valuations, anticipation of economic headwinds as
well as uncertain geo-political risks, the majority view is that, globally, equities will
continue to be the best performing asset class. This positive outlook is tempered
with the viewpoint that there is less remaining headroom in the markets as
compared to previous years.

Most also stated that they anticipated private equity to outperform public equity. The
reason most commonly stated as to why private equity performs better is that private
investors have a better chance of getting equity at a reasonable or lower cost valuation as compared to
public equity. There was not enough aggregated material on private equity specifics to provide a simple
consensus view on specific private equity sectors.

In regards to public equity, a large majority, nearly 85%, of those with a positive outlook on equities were
positive on headroom in the US equity market. Following the US equities market there was no other region
or country for which the reports reviewed indicated a majority positive outlook in general for equities,
however, close to 50% were favorable on Japan, followed in this order, by Europe, Emerging Markets and
then Asia.

DEVELOPED MARKETS
While the precise list of which countrys economies fall into a developed market category is not completely
agreed, most agree that included are the US, the Eurozone, Israel, and in Asia; Hong Kong, Japan and
South Korea. Of the developed markets, the US is still viewed as the equity market that will continue to
provide the best chance of returns, followed by Japan.

While the outlook for specific themes and sectors varies by region and country, in general for developed
markets in which interest rates were expected to rise, the most common themes viewed with a positive
outlook are Financials, Technology, and Energy.

There was also a consensus view that small and mid cap equities would perform better than large caps.
There was not a clear consensus on healthcare, however, those that grouped biotech into healthcare
tended to forecast positive equity growth in healthcare as well, while the dissenters on healthcare held an
outlook that those equities may be negatively impacted by a rising interest rate environment. There was a
high consensus that telecoms and utilities would be negatively impacted by rising interest rates, whereas in
regions where interest rates were forecasted not to raise these sectors may do better.

Compared to the US, the Eurozone valuations are more sensible however the general view is that the risks
in Europe are higher due to the series of elections this year in the Netherlands, France, and Germany and
the still unknown effects of Brexit in the UK. The UK stock market did perform surprisingly well after the
Brexit vote and is anticipated that it could perform well in 2017 as a lower valued pound could make it more
attractive for foreign investment, however, most firms suggest low weighting and exposure to UK equities.

EMERGING MARKETS
Although less bullish than the US market, the general expectation is that several equity markets in
emerging markets may do well, more so in Asia than in Latin America. Specifically Taiwan, China, Vietnam,
and India. It was noted that China has now surpassed Japan as the largest equity market in Asia in terms
of equity market capitalization.

While the potential reward outlook on emerging equities is high, so is the risk factor. The consensus view
is that emerging market equities are highly dependent on US trade policy. If trade policy favors growth
over restrictions, this will be favorable for emerging markets that export to the US, however, if US trade
policy becomes harsher on trade restrictions this would most likely negatively impact emerging market
earnings, sentiment and valuations.

March 2017 The Hutch Report Page 12 of 34

 Smart Money Equity Positions
US Equities - Small Caps
This can be done by purchasing the ETF - IWM. This investment seeks to track the investment
results of the Russell 2000 Small Cap Index.
Note: Please read the appendix for more information regarding these ETFs.

EXHIBIT 5 - IWM weekly chart. Note: this etf pays a 1.34% dividend.

US Equities - Technology
This can be done by purchasing the ETF - XLK. This investment seeks investment results that
correspond generally to the price and yield performance of publicly traded equity securities of
companies in the Technology Select Sector Index.
Note: Please read the appendix for more information regarding these ETFs.

EXHIBIT 6 - XLK weekly chart. Note: This etf pays a 1.61% dividend.

March 2017 The Hutch Report Page 13 of 34

 US Equities - Health Care
This can be done by purchasing the ETF - XLV. The investment seeks investment results that
correspond generally to the price and yield performance of publicly traded equity securities of
companies in the Health Care Select Sector Index.
Note: Please read the appendix for more information regarding these ETFs.

EXHIBIT 7 - XLV weekly chart. Note: This etf pays a dividend of 1.57 %.

US Equities - Financials
This can be done by purchasing the ETF - XLF. The investment seeks investment results that
correspond to the price and yield performance of publicly traded equity securities of companies in
the Financial Select Sector Index.
Note: Please read the appendix for more information regarding these ETFs.

EXHIBIT 8 - XLF weekly chart. Note: This etf pays a dividend of 1.72%.

March 2017 The Hutch Report Page 14 of 34

 Eurozone Equities
This can be done by purchasing the ETF - EZU. This investment seeks to track the investment
results of the MSCI EMU Index composed of large- and mid-capitalization equities from developed
market countries that use the euro as their official currency.
Note: Please read the appendix for more information regarding these ETFs.

EXHIBIT 9 - EZU weekly chart. This etf pays a dividend of 3.01%.

Emerging Markets Equities

This can be done by purchasing the ETF - EEM. The investment seeks to track the investment
results of the MSCI Emerging Markets Index.
Note: Please read the appendix for more information regarding these ETFs.

EXHIBIT 10 - EEM weekly chart. Note: This etf pays a dividend of 1.78%.

March 2017 The Hutch Report Page 15 of 34

 Currencies
The foreign
largest and
exchange market (Forex) is the
most liquid market in the world.
According to the Bank of International
Settlements, there is $5 trillion in trades that
occurs daily.
There is a great amount of complexity in these
markets and these currencies can be affected
by many different factors in the economy such
as the influences of domestic and foreign
central bank decisions, and government fiscal
policies. Large wealth institutions invest in many
areas and industries around the world and
therefore need to take into account the
fluctuations of the foreign exchange markets. To
do this they employ many different strategies
such as hedging for example.
Our objective has been to identify the principle
themes and to understand not for what purpose
the smart money is purchasing a particular
currency (such as a hedging device), but to
understand where they are finding strength and
weakness. We can identify four clear trading
centers of attention (on the right).
At one time it was not possible to follow large
money flows unless you had the connections
necessary with a number of bank accounts and
brokerage accounts in various locations around
the world. Now there are a large number of ETF
products which allow any investor to follow
these moves. We have identified the most liquid
ETF products that relate to the identified
consensus foreign exchange trading themes
mentioned.
March 2017
01 USD
There is a clear and overwhelming agreement that
the new Trump administration policies will be bullish
for the US dollar. In addition to the US government
policies, it is also believed that the Federal Reserve
will begin to increase interest rates, which will in
turn also be bullish for the US dollar. Where there
is lack of vision is to how high the US dollar will rise,
but it is expected to rise throughout the year of
2017.
02 YUAN
The second trading theme is the clear consensus
on China. It is believed that the Chinese Yuan (also
recognized as the Renminbi) is to remain weak
against the USD for some time. The overall bearish
stance on the Yuan comes from the belief that the
Chinese government cannot allow the Yuan to
strengthen for fear of the economic impact it could
cause, and will in fact be forced to eventually
devalue the Yuan.
03 YEN
The third trading theme is the Japanese Yen. Here
there is less clear consensus where roughly 20% of
those surveyed are staying neutral on the Yen,
whereas the majority is expecting the Yen to
depreciate further against the US dollar into late
2017.
04 EURO
The fourth trading theme is the Euro. Smart money
does not like volatile situations or excessive risk.
These are large money movements that take time to
accomplish, not day trades. Therefore they shy
away from potentially destabilizing situations. This is
the case of the Euro. There are a number of
elections coming up in Europe that are expected to
increase risk and put downward pressure on the
Euro, expecting it to reach parity with the US dollar.
The Hutch Report Page 16 of 34

Smart Money Currency Positions
Long US Dollar
This can be done by purchasing the ETF - UUP. This investment seeks to track the price and yield
performance of the Deutsche Bank Long US Dollar Futures index.
Note: Please read the appendix for more information regarding these ETFs.

EXHIBIT 11 - UUP Weekly, Note: the index hit a decade high of $26.83 in January 2017.

Short Yen
This can be done by purchasing the ETF - YCS. This ETF will profit from any decline in the Yen.
Note: Please read the appendix for more info regarding these ETFs.

EXHIBIT 12 - YCS Weekly, Note: the index hit a decade high of $97.29 on May 31, 2015.

March 2017 The Hutch Report Page 17 of 34

 Short Yuan
This can be done by purchasing the ETF - FXP. Trading a decline in the YUAN is more restricted,
however, a decline in the YUAN will push down Chinese stocks therefore FXP and YANG will rise on
any decline of stocks in the FTSE China 50 index.
Note: Please read the appendix for more info regarding these ETFs.

EXHIBIT 13 - FXP Weekly, Note: the index hit a decade low of $24.67 on April 27, 2015.

Short Euro
This can be done by purchasing the ETF - EUO. This ETF will profit from any decline in the EURO.
Note: Please read the appendix for more info regarding these ETFs.

EXHIBIT 14 - EUO Weekly, Note: the index hit a decade high of $27.12 on October 31, 2015.

March 2017 The Hutch Report Page 18 of 34

Commodities
Rather than try to identify individual strategic commodity based trades of any one wealth
management institution, we have set out to bring forth the global macro themes underlying these
strategies.

The words used to describe the commodity outlook are those such as, stabilizing, increasing,
neutral, strengthening, recovery, rising, basing, and turning. 80% of wealth institutions believe
that the commodity cycle has based and is set to recover, however, the market structure remains
a challenge and fundamentals across many raw materials continue to point to concerns of an
oversupply. For this reason, there is not an overly bullish view on commodities but a wait and see
neutral one.

We are able to follow the logic beginning with the belief that a Trump presidency will push
through growth programs of infrastructure spending and tax cuts and since commodities tend to
do better in a world where policy shifts from monetary to fiscal stimulus you would expect the
prices to rise. The view that commodity prices are seen to increase is the basis for the previous
view on inflation. Therefore, it is the view that commodities in turn can act as insurance against
both inflation and volatile markets.

This macro economic logic analysis continues among our list of wealth management institutions
and we find that there is a view that emerging markets growth will more than likely accelerate
because of higher commodities prices in countries such as Brazil and Russia. India was rarely
mentioned and China is not deemed the best trade due to too many other concerns at the
moment.

Oil
According to our readings, not one institution deviated from the view that
the oil price is likely to remain well supported by the Organization of the
Petroleum Exporting Countries (OPEC) agreement to cut production (at
least for now). Where their views differ is on forecasting the price of the
benchmark West Texas Intermediate (WTI) crude. Here we find a range
of potential fluctuations from $45 to $65 a barrel. The price of oil as of this
writing is currently $53.40. (See Exhibit 15)

Gold
There is no clear agreement when it comes to Gold. Gold is an unusual
commodity that is seen in different ways to different people. Some see it
as money, some see it as insurance and some see it as a pure
commodity. Which ever way it is, one fact is accepted by all of the
analysts and that is Gold is priced in US dollars. It therefore has a
natural inverse correlation. As the US dollar is expected to rise, the price
of Gold is expected to drop. There have been situations where Gold
moves in tandem with the US dollar for any number of reasons, be it
hedging against inflation or lack of confidence in the government, where
investors will run to gold. For this reason there is no clear indication on how
low it can go or how high it may go. The overall consensus seems to be that gold, like oil will be
range bound.

March 2017 The Hutch Report Page 19 of 34



The Smart Money View

The price of oil is to be supported by OPEC production cuts.

The worry over continued oversupply issues will keep the price of
oil range bound.
Soft commodities are believed to have stabilized and may be ready
to turn upward.

The Smart Money View

It is believed that the strength of the US Dollar will prevent Gold

from moving higher.
Concerns over increasing inflation keep Gold on the radar.
Consensus is that Gold will be range bound.

Crude Oil Futures Weekly Chart

EXHIBIT 15 - WTI Weekly, Note: The black lines indicate the range of forecasted levels among the top
50 private wealth management Institutions.

March 2017 The Hutch Report Page 20 of 34


Smart Money Commodity Positions
Long Crude Oil (WTI)
This can be done by purchasing the ETF - USO or OIL. The USO etf investment seeks to reflect the
performance of the spot price of West Texas Intermediate (WTI) light, sweet crude oil. The OIL etf
investment seeks to provide with exposure to the S&P GSCI Crude Oil Total Return Index.
Note: Please read the appendix for more info regarding these ETFs.

EXHIBIT 16 - USO Weekly, Note: the index hit a decade low of $7.96 on February 10, 2016 (This correlates to a low of $26 WTI)

EXHIBIT 17 - OIL Weekly, Note: the index hit a decade low of $4.51 on February 10, 2016 (This correlates to a low of $26 WTI)

March 2017 The Hutch Report Page 21 of 34


Long Commodity Based Emerging Markets - Russia
This can be done by purchasing the ETF - RSX. The investment seeks to replicate as closely as
possible, the price and yield performance of the MVIS Russia Index.
Note: Please read the appendix for more info regarding these ETFs.

EXHIBIT 18 - RSX Weekly, Note: the index hit a 52wk low of $15.45. This ETF pays a dividend of 1.61%.

Long Commodity Based Emerging Markets - Brazil

This can be done by purchasing the ETF - EWZ. The investment seeks to track the investment
results of the MSCI Brazil 25/50 Index.
Note: Please read the appendix for more info regarding these ETFs.

EXHIBIT 19 - EWZ Weekly, Note: the index hit a decade low of $19.83 on January 1st, 2016. It pays a dividend of 1.63%.

March 2017 The Hutch Report Page 22 of 34

Real Estate
While general consensus is that an increase in interest
rates may negatively impact real estate it is not the
only variable to watch. In the event of inflation, most
rental incomes may be contractually increased thereby
acting as a hedge against inflation. In the US, some
analysts state a general expectation that demand is
expected to slightly improve, however, other reports
state that retail and office vacancies are still high in the
US and business appetite has not yet grown
significantly for taking on new space so it is not clear
how much demand will really improve. Exhibit 20
shows a 12 yr. weekly chart of the VNQ real estate
investment trust etf. It is a good indication of how
historic low rates have boosted real estate over the
last 8 years in the US.

Demand is expected to be stronger in Europe than in

the US as interest rates in the EU are anticipated to
remain low and supply is also low. In general,
residential and office space seem to be forecasted to
be healthier segments than retail space. In the UK,
real estate returns are expected to suffer as a result of
Brexit. Asia real estate trends are considered mixed.
Some analysts state that in Australia the evaluations
are expensive, however, demand there is still
exceeding supply. Japan is expected to show a
positive trend and there is cautious optimism for China
although some analysts anticipate more funds flowing
from real estate and back into equities in China during
2017. The general view is that the Hong Kong real
estate market is anticipated to remain negative.

Despite anticipated lower performance than certain

equity markets, most analysts in the reports covered
recommend some exposure, mostly underweight to
neutral exposure, to real estate assets, either via direct
bricks and mortar investments or through more liquid
(and higher risk) REITs. This recommendation is not
necessarily because of strong growth forecasted in the
sector, but more so because diversification is
considered a sound practice.

The Smart Money View

Demand for real estate is expected to be stronger in Europe than in the US.
Brexit has become a concern for real estate in the UK. Returns are expected to suffer.
Smart money has exposure to the sector however there is no consensus regarding which
geographical location will bring the greatest return.

March 2017 The Hutch Report Page 23 of 34


Smart Money Real Estate Positions
US real estate
This can be done by purchasing the ETF - VNQ which employs an indexing investment approach
designed to track the performance of the MSCI US REIT Index.
Note: Please read the appendix for more information regarding these ETFs.

EXHIBIT 20 - VNQ Weekly, Note: This index pays a dividend of 4.89%.

European real estate

This can be done by purchasing the ETF - IFEU which seeks to track the investment results of the
FTSE EPRA/NAREIT Developed Europe Index composed of real estate equities in developed
European markets.
Note: Please read the appendix for more information regarding these ETFs.

EXHIBIT 21 - IFEU Weekly, Note: This index trades with very low liquidity

March 2017 The Hutch Report Page 24 of 34


International Real estate
This can be done by purchasing the ETF - RWX or VNQI. The RWX investment seeks to provide
investment results, by tracking the total return performance of the Dow Jones Global ex-U.S. Select
Real Estate Securities Index. The VNQI fund employs an indexing investment approach designed to
track the performance of the S&P Global ex-U.S. Property Index.
Note: Please read the appendix for more information regarding these ETFs.

EXHIBIT 22 - RWX weekly, Note: This ETF pays a dividend of 8.65% and has traded in a $10 range for the past 5 years.

EXHIBIT 23 - VNQI weekly, Note: This ETF pays a dividend of 5.09%.

March 2017 The Hutch Report Page 25 of 34

 New Alternative Investments

The world is increasingly digital and digitization is advancing at an increasing

pace. We see this in all aspects of life encompassing online and mobile
banking, peer-peer lending, internet shopping, social media, robotics and
automation, high frequency trading and blockchain technologies to name a few.
It is widely held that blockchain technologies hold the potential to be very
disruptive.

In the meantime one of the most common uses of blockchain technologies is

with cryptocurrencies. There are currently more than 700+ cryptocurrencies
available for trade online, but only around 25 have reached a market cap of
more than USD 10M. The top three in terms of market cap are bitcoin (USD
20.6B), ethereum (USD 1.7B), and Dash (USD 320M). Bitcoin along with the
other leading cryptocurrencies have stepped out of the shadows and have
started to move from illicit trade and slowly but surely into the mainstream.
However, wide spread adoption has yet to take place. Many experiments are
taking place for blockchain uses such as contracts, rights, specific peer-to-peer
and financial services. While cryptocurrencies can be and are used for
commerce, commerce still remains relatively fringe. The primary usage is with
cryptocurrency speculation.

Regulators and governments have kept a cautious eye on developments.

Investors and entrepreneurs have also taken steps to to foster dialog and ensure
the foundations of these businesses are being established in compliance with
regulators and governments. For example, Bitstamp, a foreign exchange, has
implemented FATCA compliance and adheres to KYC norms.

March 2017 The Hutch Report Page 26 of 34

 BITcoin

Bitcoin, referenced as BTC, as of

this writing has a market cap of
20.6B US dollars. In theory the
bitcoin algorithm limits the number
of bitcoins that can be mined
according to a predefined schedule
to 21M as shown in Exhibit 24.
There are currently 16M BTC that
have been mined and the estimation
is that 21M will be reached on or
before 2033. The total spendable
supply will actually be less than 21M
due to accidental loss, technical
issues or intentional destruction.
Bitcoin remains highly volatile, yet
its developments are being tracked
by the smart money crowd.

BITGOLD

BitGold
is an
interesting
concept with actual
backing by gold.
Despite the name, it is not an
attempt to turn gold into Bitcoin.
Bitgold is run by a Canadian
company, Goldmoney Inc. It offers
international savings and payments services
which allow people and businesses to send
payments and hold savings with physical gold.
Goldmoney holds the gold for their customers in a vault, up
to 1000 grams can be held for no storage fee, and customers
can send payments based on the spot rate value of the gold.
Goldmoney Inc. has more than 1.38 million user signups from more than
150 countries and CAD 1.76 billion (US$ 1.32B) in client assets (as at
February 2, 2017).

The Smart Money View

Smart money is investing in direct purchase of cryptocurrencies and in the companies
developing the services such as the exchanges and wallets.

March 2017 The Hutch Report Page 27 of 34


Smart Money Cryptocurrency Positions
Bitcoin
The simplest way to invest in bitcoin currently is to directly buy some. An exchange such as Bitstamp
or Gemini can be used or a wallet system like Coinbase. Three companies SolidX, Gemini and
Grayscale have filed with the SEC to run bitcoin ETFs. Grayscale already offers an OTC vehicle
OTCQX, operated by OTC Markets under the Alternative Reporting Standards. SolidX (NYSE Arca:
XBTC) and Grayscale would both be listed on the NYSE while Gemini on BATS with ticker COIN.
Coinciding with the publishing of this report, on March 10, 2017, the SEC denied the current Gemini
ETF launch request and next steps, if any, are not yet known.

EXHIBIT 24 - The predefined limit of the number of bitcoins (BTC) that can be mined is 21M.

EXHIBIT 25 - The current market cap of bitcoin at time of this writing, US$20.6B and in March 2017 was trading as high as $1278.

March 2017 The Hutch Report Page 28 of 34

Risk Outlook
The top wealth management institutions believe that ongoing central bank interventions,
increased political, economic risk and the potential for rising defaults all look set to be key
themes for 2017. As much as they are able to see the potential upside of all the growth policies of
the Trump Presidency, they are aware of the risk associated should President Trump be unable
to pass through his economic agenda. We have put together a list of the key concerns among the
top 50 wealth management institutions for 2017:

Elections in Europe in 2017 (Netherlands:March, France:May, Germany: September), which

may bring with them more populist waves if the Brexit and Trump trends continue
Brexit evolution and impact of anti-EU sentiment and migrant/immigration policies
US protectionism and trade policies towards China, Mexico, Europe, Russia, etc
Middle East tensions
Terrorism in the US and EU (militants returning home as ISIL/ISIS loses ground in Syria and
Iraq)
Russia: Russian influence in the middle east, Russian incursions in Eastern Europe
The China Communist Party 19th National Congress in September where it is currently
speculated that Xi Jingping will consolidate power
North Koreas nuclear program and missile launches
Increasing risk of incidents in the South China Sea and Taiwan Strait
De-Monetization shocks, such as India, and the move away from cash to digital cash

March 2017 The Hutch Report Page 29 of 34

 Key Events and Dates to Watch in 2017

Key Elections
Key Central Bank Meetings

Dutch General Elections: March

15
ECB: March 9th March
Fed: March 14-15 UK Self-imposed deadline for
Brexit talks: March 31
April
BOJ: Apr 26-27
France Presidential Elections
ECB: Apr 27
(Round 1): April 23
May
France Presidential Elections
(Run off): May 7
June
FED: June 13-14
ECB: June 8
July
BOJ: July
19-20
August

September
FED: Sep19-20 Germany Federal
ECB: Sep 7 Election: Sep 24
October

ECB: Oct 24
BOJ: Oct 30-31 19th National Congress of
November the Communist Party of
China:
exact date still to be
announced
December

FED: Dec 12-13

ECB: Dec 14

March 2017 The Hutch Report Page 30 of 34

Appendix
The information contained in this report has been acquired from distinct banks and business
divisions of universal banks having a substantial part of their activities focused on private banking
markets and wealth management. The results comprise the views and opinions of the top 50
wealth management institutions in the world in terms of funds under management. Listed below:

Rank Brand Country Region 2016 AUM

($Billions)

1 UBS Switzerland Europe 6351

2 Wells Fargo US North America 5869

3 Morgan Stanley US North America 4139

4 Merrill Lynch (BOFA) US North America 4012

5 Deutsche Bank Germany Europe 3739

6 Credit Suisse Switzerland Europe 3580

7 JPMorgan US North America 3337

8 ICBC China Asia 1715

9 Royal Bank of Canada Canada North America 1653

10 Scotiabank Canada North America 1554

11 Goldman Sachs US North America 1436

12 BNY Mellon US North America 1130

13 BNP Paribas France Europe 1125

14 Julius Baer Switzerland Europe 1037

15 TD Bank Canada North America 993

16 Raymond James US North America 973

17 Crdit Agricole France Europe 954

18 Nordea Sweden Europe 818

19 Barclays UK Europe 799

20 Commonwealth Bank of Australia Australia Pacific 780

21 Bank of America US North America 767

22 HSBC UK Europe 750

23 CIBC Canada North America 620

24 Macquarie Australia Pacific 568

March 2017 The Hutch Report Page 31 of 34

 25 China Construction Bank China Asia 562

26 Northern Trust US North America 552

27 ANZ Australia Pacific 542

28 DBS Singapore Asia 536

29 ABN Amro Netherlands Europe 507

30 US Bancorp US North America 500

31 Lloyds Bank UK Europe 495

32 CI Financial Canada North America 453

33 Santander Spain Europe 429

34 Bank Hapoalim Israel Europe 413

35 Colonial First State Australia Pacific 411

36 Mizuho Financial Group Japan Asia 376

37 PNC US North America 346

38 National Bank of Canada Canada North America 327

39 State Street US North America 304

40 SEB Sweden Europe 280

41 J Safra Sarasin Switzerland Europe 275

42 BB&T US North America 265

43 Banca Fideuram (Intesa Sanpaolo) Italy Europe 250

44 Natixis France Europe 217

45 LGT Liechtenstein Europe 212

46 Banque Prive Edmond de Rothschild Switzerland Europe 212

47 UniCredit Italy Europe 201

48 Banorte Mexico Central America 198

49 Nomura Japan Asia 197

50 Vontobel Switzerland Europe 177

Note: AUM = Assets under management

March 2017 The Hutch Report Page 32 of 34

Information regarding Exchange Traded Funds (ETFs)
TIP - The investment seeks to track the investment results of Bloomberg Barclays U.S. Treasury Inflation Protected Securities
(TIPS) Index (Series-L) which composed of inflation-protected U.S. Treasury bonds. The fund generally invests at least 90% of its
assets in the bonds of the underlying index and at least 95% of its assets in U.S. government bonds. It may invest up to 10% of its
assets in U.S. government bonds not included in the underlying index, but which BFA believes will help the fund track the
underlying index. It also may invest up to 5% of its assets in repurchase agreements collateralized by U.S. government obligations
and in cash and cash equivalents.

TBT - The investment seeks daily investment results that correspond to two times the inverse (-2x) of the daily performance of the
ICE U.S. Treasury 20+ Year Bond Index. The fund invests in derivatives that ProShare Advisors believes, in combination, should
have similar daily return characteristics as two times the inverse (-2x) of the daily return of the index. The index is maintained by
Interactive Data Pricing and Reference Data LLC and/or its affiliates (collectively, "Interactive Data"). The fund is non-diversified.

IWM - The investment seeks to track the investment results of the Russell 2000 Index, which measures the performance of the
small-capitalization sector of the U.S. equity market. The fund generally invests at least 90% of its assets in securities of the
underlying index and in depositary receipts representing securities of the underlying index. It may invest the remainder of its assets
in certain futures, options and swap contracts, cash and cash equivalents, as well as in securities not included in the underlying index,
but which the advisor believes will help the fund track the underlying index.

XLK - The investment seeks investment results that, before expenses, correspond generally to the price and yield performance of
publicly traded equity securities of companies in the Technology Select Sector Index. In seeking to track the performance of the
index, the fund employs a replication strategy, which means that the fund typically invests in substantially all of the securities
represented in the index in approximately the same proportions as the index. It generally invests substantially all, but at least 95%, of
its total assets in the securities comprising the index. The fund is non-diversified.

XLV - The investment seeks investment results that, before expenses, correspond generally to the price and yield performance of
publicly traded equity securities of companies in the Health Care Select Sector Index. In seeking to track the performance of the
index, the fund employs a replication strategy. It generally invests substantially all, but at least 95%, of its total assets in the securities
comprising the index. The index includes companies from the following industries: pharmaceuticals; health care equipment &
supplies; health care providers & services; biotechnology; life sciences tools & services; and health care technology. The fund is non-
diversified.

XLF - The investment seeks investment results that, before expenses, correspond to the price and yield performance of publicly
traded equity securities of companies in the Financial Select Sector Index. The fund generally invests substantially all, but at least
95%, of its total assets in common stocks that compose its index, either directly or through investment in the Real Estate Select
Sector SPDR Fund. The index includes companies from the following industries: diversified financial services; insurance; banks;
capital markets; REITs; consumer finance; thrifts and mortgage finance; and real estate management and development. The fund is
non-diversified.

EZU - The investment seeks to track the investment results of the MSCI EMU Index composed of large- and mid-capitalization
equities from developed market countries that use the euro as their official currency. The fund generally invests at least 95% of its
assets in the securities of its underlying index and in depositary receipts representing securities in its underlying index. The index
consists of stocks from the following 10 developed market countries: Austria; Belgium; Finland; France; Germany; Ireland; Italy; the
Netherlands; Portugal; and Spain.

EEM - The investment seeks to track the investment results of the MSCI Emerging Markets Index. The fund generally invests at
least 90% of its assets in the securities of its underlying index and in depositary receipts representing securities in its underlying
index. The index is designed to measure equity market performance in the global emerging markets. It may invest the remainder of
its assets in other securities, including securities not in the underlying index, but which BFA believes will help the fund track the
index, and in other investments, including futures contracts, options on futures contracts, other types of options and swaps related to
its index.

UUP - The investment seeks to track the price and yield performance, before fees and expenses, of the Deutsche Bank Long US
Dollar Futures index. The index is comprised solely of long futures contracts. The futures contract is designed to replicate the
performance of being long the US Dollar against the Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and Swiss
Franc.

YCS - The investment seeks to provide daily investment results (before fees and expenses) that correspond to twice (200%) the
inverse of the daily performance of the U.S. Dollar price of the Japanese Yen. The UltraShort Funds do not seek to achieve their
stated objectives over a period greater than a single day.

FXP - The investment seeks daily investment results, before fees and expenses, that correspond to two times the inverse (-2x) of
the daily performance of the FTSE China 50 Index. The fund invests in derivatives that ProShare Advisors believes, in combination,
should have similar daily return characteristics as two times the inverse (-2x) of the daily return of the index. The index is published
under the Bloomberg ticker symbol "XINOI." The fund is non-diversified.
March 2017 The Hutch Report Page 33 of 34
EUO - The investment seeks daily results that match (before fees and expenses) twice the inverse (-2x) of the daily performance
of the U.S. Dollar price of the Euro. The "UltraShort" Funds seek daily results that match (before fees and expenses) two times the
inverse (-2x) of the daily performance of a benchmark. The UltraShort Funds do not seek to achieve their stated objectives over a
period greater than a single day.

USO - The investment seeks to reflect the performance, less expenses, of the spot price of West Texas Intermediate (WTI) light,
sweet crude oil. The fund will invest in futures contracts for light, sweet crude oil, other types of crude oil, diesel-heating oil,
gasoline, natural gas, and other petroleum-based fuels that are traded on the NYMEX, ICE Futures Exchange or other U.S. and
foreign exchanges.

OIL - The investment seeks to provide with exposure to the S&P GSCI Crude Oil Total Return Index. The S&P GSCI Crude Oil
Total Return Index (the "index") is a sub-index of the S&P GSCI Commodity Index. The index reflects the returns that are potentially
available through an unleveraged investment in the West Texas Intermediate (WTI) crude oil futures contract.

RSX - The investment seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the
MVISa Russia Index. The fund normally invests at least 80% of its total assets in securities that comprise the fund's benchmark
index. The index includes securities, which may include depositary receipts, of Russian companies. A company is generally
considered to be a Russian company if it is incorporated in Russia or is incorporated outside of Russia but generates at least 50% of
its revenues (or, in certain circumstances, has at least 50% of its assets) in Russia. It is non-diversified.

EWZ - The investment seeks to track the investment results of the MSCI Brazil 25/50 Index. The fund generally invests at least
95% of its assets in the securities of its underlying index and in depositary receipts ("DRs") representing securities in its underlying
index. The index, which consists of stocks traded primarily on the BM&FBOVESPA, is a free float-adjusted market capitalization-
weighted index with a capping methodology applied to issuer weights so that no single issuer of a component exceeds 25% of the
underlying index weight, and all issuers with weight above 5% do not cumulatively exceed 50% of the underlying index weight. The
fund is non-diversified.

VNQ - The investment seeks to provide a high level of income and moderate long-term capital appreciation by tracking the
performance of a benchmark index that measures the performance of publicly traded equity REITs. The fund employs an indexing
investment approach designed to track the performance of the MSCI US REIT Index. The index is composed of stocks of publicly
traded equity real estate investment trusts (known as REITs). The adviser attempts to replicate the index by investing all, or
substantially all, of its assets in the stocks that make up the index, holding each stock in approximately the same proportion as its
weighting in the index.

IFEU - The investment seeks to track the investment results of the FTSE EPRA/NAREIT Developed Europe Index composed of
real estate equities in developed European markets. The fund generally will invest at least 90% of its assets in the component
securities of the underlying index and in investments that have economic characteristics that are substantially identical to the
component securities of the underlying index. The underlying index measures the stock performance of companies engaged in the
ownership and development of developed European real estate markets as defined by FTSE EPRA/NAREIT. The fund is non-
diversified.

RWX - The investment seeks to provide investment results, before fees and expenses, correspond generally to the total return
performance of the Dow Jones Global ex-U.S. Select Real Estate Securities Index. The fund generally invests substantially all, but at
least 80%, of its total assets in the securities comprising the index and in depositary receipts based on securities comprising the
index. The index is a float-adjusted market capitalization index designed to measure the performance of publicly traded real estate
securities in countries excluding the United States. The fund is non-diversified.

VNQI - The investment seeks to track the performance of a benchmark index. The fund employs an indexing investment approach
designed to track the performance of the S&P Global ex-U.S. Property Index, a float-adjusted, market-capitalization-weighted index
that measures the equity market performance of international real estate stocks in both developed and emerging markets. The index is
composed of stocks of publicly traded equity real estate investment trusts (known as REITs) and certain real estate management and
development companies (REMDs). It is non-diversified.

Disclaimer:
The Hutch Report 2017
The views expressed in this report are collated by the authors from opinions expressed by individuals working within the Private Banking Wealth Management
Industry. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no legal
responsibility can be accepted by The Hutch Report for any loss or damage resultant from the contents of this document. This material does not necessarily
represent the view of The Hutch Report in relation to particular investment strategies. In full disclosure, the authors may or may not be holding one or many positions
presented in this report at the time of reading.

The Private Wealth Management Macro Overview ( TheHutchReport) is produced for general interest only; it is not definitive and is not intended to give advice. It
must not be relied upon in anyway. All opinions and claims are based upon data on 12/16/16 and may not come to pass. This information is subject to change at any
time, based upon economic, market and other considerations and should not be construed as a recommendation.

Reproduction of this report in whole or in part is not permitted without the prior written approval of The Hutch Report. In preparing The Private Wealth Management
Macro Overview, The Hutch Report does not imply or establish any client, advisory, financial or professional relationship. Through The Private Wealth Management
Macro Overview, neither The Hutch Report nor any other person is providing advisory, financial or other services.

For inquiries contact:

thehutchreport@gmail.com

March 2017 The Hutch Report Page 34 of 34