charles stanley issue 10 investment choices news · 2019-02-15 · charles stanley investment...

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CHARLES STANLEYINVESTMENT CHOICESNEWS

Issue 10 Winter 2018

brought to you by

York Minster, York,North Yorkshire.

Clean Energy TechnologyTake advantage of the revolution

Thematic InvestingWhat is investing in ‘macro themes’?

Nice to meet you!Our inaugural Seminar

Charles StanleyFinancial PlanningA world of difference

Growth vs Value InvestingIs it time to switch your strategy?

How safe is your data?Investing in data security companies

Investing MonthlySpreading risk over time

Investing in AsiaAn option for your income portfolio?

Save Inheritance Tax...and help productivity in the UK

02 | www.csinvestmentchoices.co.uk

Need help? 01482 861455

5/7 Landress Lane, Beverley, East Yorkshire, HU17 8HA

[email protected]

www.csinvestmentchoices.co.ukIf you would like to discuss the investments described in this magazine, or need help completing the application forms, please get in touch - we’re here to help!

What’s inside?

Charles Stanley Investment Choices News Winter 2018

06

14

22

08 10

18

24

20

26

Investing MonthlyGet into the habit of saving and build your nest egg

Investing in AsiaCould it be an option for your Income portfolio?

Save Inheritance Tax...and help productivity in the UK

Low Carbon EnergyTake advantage of the clean energy technological revolution

Growth vs ValueIs it time to re-evaluate your investment strategy?

Thematic InvestingFive ‘macro themes’ stimulating economic growth

Nice to meet you!Charles Stanley Investment Choices Seminar

How Safe is Your Data? Investing in data security

Charles Stanley Financial PlanningA world of difference

www.csinvestmentchoices.co.uk | 03

A note from your co-editor...

Welcome to the latest edition of the Investment Choices magazine which

I hope you will find interesting and informative. We always appreciate

feedback from our clients (both positive and negative) so if you have any

suggestions in connection with the content or ideas on how we could

improve what we provide to you, please let us know. If you have received

our magazine for the very first time and would like to know more about our

services and products – please call us on 01482 861455 or visit our website


In the last issue (the autumn edition), we touched on the likely impact on

the global economy of the trade wars/barriers and rising interest rates on

what had been an improving overall picture. Following a sudden increase

in volatility at the end of the first quarter of 2018, we considered the merits

of investing globally and in bonds as potential portfolio diversifiers. We also

devoted some space to investigate the reasons behind the out-performance

of smaller company funds over the last 10 years and the growth of artificial

intelligence (AI).

With volatility in the markets set to continue for the foreseeable future,

in this issue we consider the benefits of monthly investing and compare

growth versus value investment styles. Additionally we look at the options

for investors in the low carbon power generation sector and the technology

driving it.

Investing for income for many of our clients has tended to be focused on UK

companies but there are other opportunities out there – we look at what Asia

has to offer as an alternative. Also featured is “Thematic Investing” which is

becoming increasingly popular – we look at the “macro” themes which are

likely to stimulate future economic growth.

Last but not least, we cover our in-house Inheritance Tax Portfolio service

and feature highlights of the inaugural Charles Stanley Investment Choices

seminar in Beverley which was held in October 2018 in partnership with

Charles Stanley’s Financial Planning Division.

Good luck with your investing!

Stephen.

Stephen Luwero ACSI

Client Relations & Business

Development Manager


£10,000

£80,000

£40,000

£60,000

£20,000

£10,000

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Equities £68,779

Bonds£46,492

Cash£24,512

Nelson Mandela becomes South

African president1995

Asiancurrency

crisis1997

Establishmentof the ECB1998

eLT CMfailur1998

September 1 1th2001

Dot Compeak 2000

4,00 0

3,00 0

Invasionof Iraq2003

Subprimeloan problems

emerge2007

European M&A

surpasses US

2007

L ehman Brotherscollapses

2008Europeansovereigndebt crisis

2010

US losesits ‘AAA’

credit rating2011

Hurricane Katrina makes landfall

2005

BREXIT Leave Result 2016

US Election

Spike in CBOE Volatility Index


Long TermInvesting for the

Despite volatility, markets have appreciated over time

Financial markets can be volatile and downturns as well as upturns are part of equity investing. But short-term declines should not detract from the potential of the stock market to help investors meet their goals. In fact, short-term market declines underline the case for a long-term approach to investing.

Of course, the investment choices depend on an investor’s specific circumstances, goals, attitude to risk and investing time horizon. This will influence how much money is allocated and, if appropriate, how much of this is invested in growth-oriented equities. All financial investments involve an element of risk, so the value of your initial investment cannot be guaranteed and the historical performance of markets is not a guide to future returns.

Past performance is not a guide to future returns.

Source: Thomson Reuters Datastream. All data from 30 July 1993 to 31 July 2018. The information provided is for illustrative purposes only and is not meant to represent the past or future performance of any particular investment. It is not possible to invest directly in an index. Equities are represented by the FTSE All-Share Index (total return). Bonds are represented by the FTSE Actuaries UK Gilts All Stocks Index (total return). Cash is represented by three-month LIBOR rates. All returns are in sterling terms and are based on monthly closing prices of the respective indices.

£10,000

£80,000

£40,000

£60,000

£20,000

£10,000

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Equities £68,779

Bonds£46,492

Cash£24,512

Nelson Mandela becomes South

African president1995

Asiancurrency

crisis1997

Establishmentof the ECB1998

eLT CMfailur1998

September 1 1th2001

Dot Compeak 2000

4,00 0

3,00 0

Invasionof Iraq2003

Subprimeloan problems

emerge2007

European M&A

surpasses US

2007

L ehman Brotherscollapses

2008Europeansovereigndebt crisis

2010

US losesits ‘AAA’

credit rating2011

Hurricane Katrina makes landfall

2005

BREXIT Leave Result 2016

US Election

Spike in CBOE Volatility Index

The chart shows that even with market volatility, an investment in the FTSE All-Share Index 25 years ago would have grown to nearly seven times its original value by July 2018.


Investing for the long term



Even in times of austerity and the increase in the general cost of living, can we afford to put off the decision to save for the future?

Government spending will continue to be squeezed as a result of the consequences of us living longer. The support the state provides us with today may not be as comprehensive in twenty to thirty years from now. It is therefore more of a necessity than ever to build your own nest egg.

Pound Cost Averaging

For new investors, saving monthly is a good way to start – it becomes habit forming. For the price of a good meal, savers can start to plan more effectively for the future.

Investing lump sums is not for everyone for a number of reasons including lack of available funds and fear of getting the timing wrong. Investors who save monthly can use the volatility of the markets to their advantage by buying more units in a fund when prices are lower but of course the downside is that less units are bought when markets are increasing. The overall impact however is a smoothing one and is more commonly known as pound cost averaging.

In this hypothetical example, an investor made monthly payments of £100. When the unit price rose the investor bought fewer units and as the price fell the investor bought more units in the fund. As a result the investor’s average cost per unit of £5 was lower than the average market price of £8.30 over the same time period. There will of course be times when the price of units

continually rise or fall, in which case the average unit price could be higher or lower than the market average.

Why isn’t everyone investing this way?

Clearly there are advantages to pound cost averaging, including the potential to benefit from volatile or falling markets. However, there are also disadvantages when compared to investing lump sums, such as missing out on the significant growth in a rapidly rising market. The choice of which route to take is a personal one but investing monthly does introduce a “saving discipline” with the result that saving almost becomes second nature. If you are regularly saving a manageable amount you develop a “savings habit” which will stand you in good stead as your lifestyle changes. It is

very difficult without the benefit of hindsight to invest at a low point in the market – and some would say impossible. Even renowned investor Warren Buffett cannot predict the future but he does base his investment decisions on a very simple premise which has helped investors:

‘be fearful when others are greedy and greedy when others are fearful’.

Investing on a monthly basis can take away the “fear factor” that Warren Buffett refers to. Whilst it is still worrying to see your investments take a dip when there is a downturn in the markets, the effect will not be as pronounced as if you had invested a lump sum the day before the downturn started.

InvestingMonthly

Invest £100 per month for 5 months

Total number of units purchased: 100 - Average price £5 per unit

Monthly Unit Number of Month investment price units bought

1 £100 £5.00 20

2 £100 £4.00 25

3 £100 £2.50 40

4 £100 £10.00 10

5 £100 £20.00 5


Investing Monthly

“Investments should be made for the

medium to long term - 5 years or longer -

although contributions can be stopped or

changed at any time.”

OK, I like the idea of investing monthly but where do I start?

The Aegon fund universe has over 3,000 funds from which to choose and selecting one could be a daunting task. For this reason we feature funds in the magazine to choose from which are both eligible for lump sum and monthly investing. As an example we have chosen one of the largest and most well-known funds in the UK – The Fidelity Special Situations Fund.

The fund, although not particularly volatile, has experienced the ups and downs of the stock market over the last 20 years. This has allowed investors to benefit from the effect of pound cost averaging. As always, it should be borne in mind that past performance is not a reliable indicator to future returns.

How much can I invest?

In our example we have assumed an investment of £100 per month. However, monthly contributions can start from as little as £10 per fund. There are many funds available from which to choose, including the Fidelity Special Situations Fund. Take a look at the funds featured in this edition or talk to one of our Client Relationship Managers who will be happy to answer any of your questions.

What if I need to stop or change my contributions?

Investments should be made for the medium to long term – 5 years or longer – although your contributions can be stopped or changed at any time. There is no commitment to a fixed term and your investment is not subject to a qualifying period. Money can be left invested until you want to recommence your contributions or withdrawn at any time without a penalty.

Written confirmation is not required to make changes to your monthly contributions. You can provide instructions via email or by telephone.

In summary, the benefits of regular savings are:-

• Easy to get started – invest from £10 per month

• Flexible – amend your investment choice at any time and withdraw your savings without penalty

• No need to worry about “timing the market” – one of the disadvantages of making a lump sum investment is that no one knows for certain where the market will go next. Will you be buying at the highest point in the cycle or lowest? The averaging effect of making regular investment into stock-markets takes away that concern since you know that you will be buying at all stages of the market cycle.

I have made my choice- what next?Once you have decided which fund(s) you want to invest into and whether you are investing inside or outside of an ISA, complete the relevant application form, not forgetting the Direct Debit Mandate, and return them to us.

Source: Fidelity. Values shown include net income reinvested as at 30.10.2018.

10 years 20 years

£100,000

£90,000

£80,000

£70,000

£60,000

£50,000

£40,000

£30,000

£20,000

£10,000

£0

Results of saving £100 per month into the Fidelity Special Situations Fund

cost

value

£12,000 cost £22,210 value

£24,000 cost £79,863 value



‘An Inconvenient Truth’ was the title of a documentary released in 2006 featuring the former Vice President of the United States, Al Gore about his campaign to educate the public on the dangers of global warming – something that he had been highlighting since the late 1980’s. The film is credited with re-energising public awareness about climate change and the need to move to low carbon emission energy sources and technologies.

Over the past 30 years significant findings regarding global warming highlighted the need to curb carbon emissions and from this the idea of low-carbon power was born. The Intergovernmental Panel on Climate Change (IPCC), established by the World Meteorological Organisation (WMO) and the United Nations Environment Program (UNEP) in 1988, set the scientific precedent for the introduction of low-carbon power. The IPCC has continued to provide scientific, technical and socio-economic advice to the world community, through its periodic assessment reports.

Internationally, the most important agreement intended to drive the introduction of low-carbon power was the signing of the Kyoto Protocol which came into force on the 16th February 2006. The agreement committed most industrialised countries to reduce their carbon emissions providing a political momentum to introduce low carbon power technology – regrettably the United States recently withdrew from the protocol but this has not stopped the drive to reduce carbon emissions. It is an extremely difficult task especially for countries reliant on carbon emitting power generation such as coal fired power stations.

What are low carbon power technologies?

There are a range of options available to generate low carbon power which are increasing in number and becoming more efficient as technology advances – these can be broadly split into five areas

• Renewables – energy is derived from sustainable natural processes including solar, wind and tidal. In the UK for example, energy from renewable sources accounted for 8.9% of total energy consumption in 2016 (Source: Committee on

Climate Change)

• Nuclear Power – a key source of electricity generation since the 1970’s

• Carbon Capture & Storage – this technology captures carbon dioxide emitted by large installations (such as industrial processes, or from burning fossil fuels or biomass) and stores it in secure spaces, such as geological formations deep underground or under the seabed

• Bioenergy – this refers to solid, liquid or gas fuels made from biomass feedstocks (e.g. maize or wood)

• Electrification – this is the process of moving from other energy sources to low carbon sources of electricity. Emissions from the power sector are falling and converting vehicles and heating to alternative power sources will help to reduce carbon emissions further.

Public awareness is driving forward technological advances and there is now an acceptance that more has to be done

quickly to reduce carbon emissions around the world. Even in countries that have an over reliance on fossil fuel based energy production (i.e. China & India) are now investing heavily in low carbon based power generation. Where there are high profile pollution events such as the “smog” covering major cities such as Dehli, public criticism of fossil fuel power generation is becoming more vocal and governments will act as a result.

An Inconvenient Truth The need for low-carbon

power generation

Take advantage of the energy revolutionMany companies around the world are now embracing the need to develop energy saving technology or are embracing the push towards reducing energy emissions. Pictet Asset Management is a leader in Thematic investing and has dedicated substantial resources to attract the right expertise over the years. The Pictet Clean Energy Fund has a broader allocation than most in its sector providing a greater diversification for investors.


Low Carbon Energy

The sterling version of the fund was launched in 2009 but it has been in existence since 2007. The fund mainly invests in the shares of companies that contribute to lowering carbon emissions. As a result the management team favour companies operating in the field of cleaner infrastructures, carbon-reducing technologies and equipment along with the generation, transmission and distribution of cleaner energy and energy efficiency.

The fund has an international mandate but has a bias towards the United States where nearly 60% of the assets are invested (as at 31st October 2018) primarily because much of the innovation in low carbon energy is being developed by companies based there. The largest holding in the fund for example is Nextera Energy Inc which is the world’s largest utility company. They provide energy across the low carbon spectrum ranging

from wind and solar energy to battery energy storage with the latter storing energy from solar plants for times when it is needed.

There are a broad range of companies held within the fund which differentiates it from those funds that focus purely on the renewable energy sector. One of the key attributes that the fund managers look for are those companies that have strong cash flows and are therefore well established with unproven companies avoided. This does not mean the fund is not susceptible to market volatility and it will be affected as any other fund will when there is a decline in markets. This has been particularly noticeable in 2018 following the technology sell-off. However, the management teams’ opinion is that the diversified nature of the portfolio should help protect investors from the worst of any downturns over the long term.

Pictet Clean Energy I Fund

PERFORMANCE

DISCRETE ANNUAL PERFORMANCEAS AT 18/11/2018

Pictet Clean Energy I dy GBP

IA Global

0-12m 12-24m 24-36m 36-48m 48-60m

Pictet Clean Energy I dy GBP -11.6 +22.8 +21.6 -7.3 +5.0

IA Global +2.1 +16.1 +22.7 +0.1 +6.7

14/05/2007 – 18/11/2018 Source: FE Analytics

ASSET ALLOCATION

Fund Focus

FUND FACTS

CHARGES

*The Ongoing Charges Figure Plus includes all the costs

associated with owning the fund such as transaction costs and

incidental costs such as performance related fees. Whilst we

endeavour to show all charges associated with specific funds,

sometimes this is not possible due to the information not being

made available by the fund provider. In such cases transaction

or incidental cost information may be missing.

Fund Size £641m

Fund Type SCIV

Classification Income

Launch Date 14/05/2007

Yield 0%

Dividend Date Annually

Ongoing Charges Figure Plus* 1.54%

Initial Charge 0%

Charles Stanley Investment Choices Servicing Fee 0.37%

Aegon Platform Fee 0.23%

Total Ongoing Charges 2.14%Energy 46%

Technology 39%

Alternative & Renewable Energy 8%

Infrastructure 4%

Money Market 3%

Source: Funds Library

An Inconvenient Truth

% Net Assets

120%

100%

80%

60%

40%

20%

0%

-20%

-40%

May 2007 Sep 2008 Mar 2010 Sep 2011 Mar 2013 Sep 2014 Mar 2016 Sep 2017

Performance %


Value investing can be summarised as acquiring more shares for your money than you would expect than if they were fairly valued and profiting when the rest of the market catches up with your thinking boosting their value. The strategy is very popular among fund managers which would suggest that long-term value investors should achieve superior returns to growth investors - with potentially lower overall risk. However, this strategy would have served investors poorly over the past decade, as growth-oriented stocks outperformed their value-focused counterparts by some margin.

Since March 2009, both growth and value stocks have pushed the market forward. In 2017 growth outperformed value stocks significantly, but with the ever changing

investment landscape and interest rate headwinds could value investing make a strong comeback? Understandably, investors are now starting to consider the outlook for the two strategies and there are good arguments to support the case for both.

To get a better understanding of the two styles it helps to see which sectors have been invested in over the last few years. Both styles are not restricted to any particular sector although of late growth has been dominated by the technology orientated companies particularly product innovators like Apple, social networking companies and healthcare. On the other hand we have started to see energy, materials and financials start to be more


Growth vs Value Investing

Should you favour one over the other?

“Since March 2009,

both growth and value

stocks have pushed

the market forward

and in 2017 growth

outperformed value

stocks significantly.”




prominent in value funds. All the three sectors have faced major challenges over the last 10 years and company share prices have come under significant pressure which has necessitated general structural changes and company specific re-organisations.

In the case of energy and materials - in 2014 and 2015 we saw sharp drops in product prices due in part to the strong dollar and slowing demand - financials on the other hand have had to contend with repairing balance sheets following the credit crisis and increased levels of regulation.

The Case for Growth

One argument in support of the growth style continuing outperformance is that current valuations are not considered expensive based on long term averages. In addition, it is generally expected that a small number of truly innovative, uniquely positioned technology companies like Amazon, Apple, Alphabet (owner of Google) and healthcare to continue to grow both market share and earnings as they gain new customers in their existing markets with new services and products. Another opportunity for these companies lies in Emerging Markets where there is untapped potential which could drive future earnings.

The Case for Value

By any measure, growth has had a very strong run in the last few years. However, looking back in history share prices can become overvalued at times due to unreasonable expectations which can lead to a

correction. Although no one is expecting a dot-com style collapse in share prices, some commentators feel valuations are overstretched currently and one is overdue - a correction which may have already started.

Historically, it is from such extended levels that value investing has tended to outperform growth meaningfully over a number of years. Also supporting the value argument is the fact valuation spreads in general within the market have widened significantly.

Finally, higher interest rates pose a greater headwind to growth companies than to value. As with bond markets, longer duration investments are more negatively impacted by rising rates.

Summary

Given the respective merits of both investment styles, it is

reasonable to suggest that an approach

incorporating both growth and value investments is a good strategy for investors.

Historically, the funds that have generated the better annual returns have

had a mixture of both the value and growth ends of the market.

In 2015, for example, the exceptional returns from growth oriented stocks was well documented. However, what is less well known is that a significant number of the best-performing stocks in the market were value names.

Therefore, it makes sense to maintain a diversified equity exposure – incorporating both value companies displaying credible paths toward improvement, as well as high-multiple, high-expectation growth companies where the long-term potential remains underestimated by the market.

In a number of previous editions of this magazine we have covered many growth funds. For this reason we have opted to explore the merits of two value funds namely Polar Capital UK Value Opportunities and Jupiter Income on the following two pages.

When selecting funds, consistent long term performance is a major factor and Jupiter Income is a good example of a fund which has delivered this. However, long-term performance is not the only criteria we use in selecting a fund for inclusion. In selecting the Polar Capital UK Value Opportunities (a relatively new fund), we have taken into account the managers track record of running similar funds with other fund management groups.

How do I invest?If you hold an existing ISA with us, complete the ISA application enclosed and return the form to us along with a cheque made payable to Cofunds Ltd if required. Alternatively, if you do not hold an ISA, or wish to transfer an existing ISA (Cash or Stocks and Shares) or invest outside of ISA, please request an application using the response form enclosed.



0-12m 12-24m 24-36m 36-48m 48-60m

Polar Capital UK Value Opportunities I Acc -8.5 - - - -

IA UK All Companies -5.1 +14.4 +8.1 +9.8 -1.4


ASSET ALLOCATION

Polar Capital UK Value Opportunities Fund

Fund Managers Georgina Hamilton and George Godber built their reputations as co-managers of the CF Miton UK Value Opportunities fund which they ran before joining Polar Capital in October 2016 and April 2017 respectively. At Miton the duo achieved AAA status and assets under management grew very quickly to £869 million. Their value strategy was very successful and delivered returns in excess of their peer groups between March 2013 and June 2016.

Following the launch of Polar Capital UK Value Opportunities fund in February 2017, we covered it in our Spring 2017 magazine as it was an excellent opportunity to invest at a very early stage in what is a proven management team. Almost 2 years later the fund has grown to £741.70 million which is a tremendous achievement over a very short period. Admittedly the launch was right at the top of the market cycle with many

indexes hitting all-time highs which would have presented a challenge to most fund managers. With this in mind it was expected that the performance of the fund in the early days would be under-whelming and only start to come into its own once we started to see a valuation reassessment across the market as a whole.

No restrictionsThe team follows a unique stock picking process to ascertain a company’s financial strength and fundamental value. A company can be considered for inclusion in the portfolio if it meets the strict screening criteria. They employ a multi-cap approach with no restriction on the size of the companies that they will consider but they do not simply look for cheap stocks – sometimes the share price is cheap for a reason! The other key points they will consider are:

• If the company is a “value creator”. This means that it has the ability to grow through its own efforts but still remains unappreciated by the markets.

• The company share price must not be at risk of a sudden depreciation – operating in a niche market can result in this.

• Cash flow must be strong so that it continues to reinvest into the business.

All companies that they consider must finally pass a “safety check” to ensure there are no liabilities that could act as a drag on the company’s development – pension scheme liabilities for example.

What is the outlook for the fund?

Many UK funds made adjustments to their portfolios following the referendum result to leave the European Union but Georgina and George have not had to deal with this issue as the fund was launched in February 2017. Their stock picking approach has simply concentrated on the fundamentals of the companies they have selected and have largely ignored big events. Whilst their view is that some sort of deal will be agreed with the EU, it is impossible to be certain of the future direction of the UK economy as whole - however value investing might weather the storm better than others.

Fund Focus

IA UK All Companies

Polar Capital UK Value Opportunities I Acc

PERFORMANCE


CHARGES









Initial Charge 0%



Total Ongoing Charges 2.77%


Capital Goods 17%

Consumer Durables 12%

Materials 11%

Financials 8%

Banks 7%

Business Services 6%

Retail 4%

Transport 4%

Real Estate 4%

Others 27%

% Net Assets

FUND FACTS

Fund Size £741.70m

Fund Type OEIC

Classification Accumulation


Yield 0%

Dividend Dates N/A

10%

5%

0%

-5%

-10%

Nov 2017 Jan 2018 Mar 2018 May 2018 Jul 2018 Sep 2018

Performance %


CHARGES









Initial Charge 0%






ASSET ALLOCATION

0-12m 12-24m 24-36m 36-48m 48-60m

Jupiter Income Trust I Acc -2.7 +9.2 +20.7 +6.4 +2.3

IA UK Equity Income -5.1 +11.4 +7.5 +10.7 +0.8

Buying something out of favour always has an uncomfortable feeling about it but for value fund managers it can provide the opportunity to outperform others. One such manager, who has made the concept an art-form, is Ben Whitmore who has run the Jupiter Income fund since January 2013. He joined in October 2006 from Schroders where he managed £2 billion worth of retail and institutional portfolios which included the £281m Schroder Recovery Fund. It was at Schroder that he established an excellent track record as a value and contrarian fund manager.

Ben took over the management of the fund from Tony Nutt who also had established an enviable record after doubling investors money under his management by the time he left.

The transition from a very successful and long standing manager was unsettling for many investors in the fund but they were

reassured by the knowledge that Ben was taking over with a very similar style to Tony’s. In his short time at Jupiter, Ben had built on his already impressive reputation.

The fund’s objective continues to be to produce a high income which increases at least in line with inflation from a managed portfolio mainly invested in UK equities and fixed interest with some overseas exposure. The transition to Ben so far has been seamless with the fund performing strongly producing top quartile returns over 1, 3 and 5 years as at 30th September 2018.

Ben’s style is a deep value investment process which involves investing in companies where the risks appear overstated and prospects understated, possibly because they have been through a tough patch. But he will only invest if he thinks the setback is temporary.

Once the company recovers, he aims to sell their shares at a higher price and move on

to the next opportunity. In the meantime he will collect the dividends these companies pay. These are paid out to the fund’s investors, or reinvested back into the fund, depending on which unit class is held. He sticks to the process through thick and thin. He will not get it right every time, but it is an approach that has worked well for investors over the long term.

Since Ben took full control of the fund in January 2013, it has not disappointed although growth orientated companies have generally outperformed value. Like everyone though, Brexit is a concern and Ben is finding it had to read how the economy will perform given the range of possible outcomes from the negotiations.

Jupiter Income Trust I Acc

IA UK Equity Income

Jupiter Income Fund – Income of 4% per annum payable half-yearly (variable as at 25.10.2018).



Financials 23%

Consumer Services 20%

Industrials 11%

Consumer Goods 11%

Oil & Gas 9%

Health Care 8%

Money Market 6%

Telecommunications 4%

Utilities 3%

Others 5%

% Net Assets

FUND FACTS

Fund Size £2523.65mn

Fund Type Unit Trust



Yield 4%

Dividend Dates February & August

PERFORMANCE

60%

50%

40%

30%

20%

10%

0%

-10%

-20%

2014 2015 2016 2017 2018

Performance %

Fund Focus



Traditionally, investors searching for income have tended to focus on funds that hold a large proportion in UK blue chip companies with the potential to pay consistent dividends.

However, there are attractive income opportunities to be found around the world, including Asia, where many countries are growing more quickly than their counterparts in the west and companies are increasingly paying dividends to shareholders. With bond markets jittery and equity markets in the US, Europe and the UK starting to wobble, Asia could be the place for sustainable growth and income.

Having learnt lessons from the past, the region’s reform-minded governments are helping to steer these economies away from export-led growth models to more sustainable growth underpinned by domestic demand. But Asia is no longer just about capital growth, in an increasingly income-hungry world Asian dividends have become a key source of income for investors.

Additionally, Asian dividends have tended to be more evenly spread between small and large companies. This has not always been the case in the west and if we look at the UK as an example, a higher proportion

of dividends are being generated by large companies. According to data we have retrieved from Thomson Reuters, in 2017 oil giants Royal Dutch Shell and BP accounted for around 19% of the dividends paid out by firms listed on the FTSE 350 index, paying two of the highest in the index, at 12% and 7% respectively.

Investing in Asia can be very beneficial but it is important to understand what you are investing in as the market is very diverse and each country has its own set of challenges. The MSCI Asia Index is a good representation with Japan, Australia and China accounting for 50%, 20% and 20% respectively. Singapore, South Korean and Taiwan account for much of the remainder.

We all know dividend payments are never guaranteed – there is always the risk that a company might make a cut if it runs into trouble as we saw in the developed economies at the height of the credit crunch when many banks and other companies were forced to cancel distributions. Asia itself has had to contend with its own events such as the currency crisis in 1997, but it is worth noting that the region has continued to undergo financial and economic reforms. There is also a growing emphasis on shareholder returns coupled with sustainable dividend growth.

So what is the appeal of Asia?

Investing for income overseas may offer a way for investors to avoid being too reliant on the performance of the UK market. Holding a broad blend of stocks in any portfolio can help reduce the risk of setbacks which can impact on returns.

Asia forIncome

Investing in

An alternative for those seeking income...

“Investing in Asia

can be very beneficial

but it’s important to

understand what you

are investing in as the

market is very diverse

and each country has

it’s own challenges.”

Investing in Asia for income


The Asia Pacific region holds around half the world’s population, with increasing levels of disposable income among the middle classes in China and India helping to drive consumer spending in the region.

Improving corporate governance is also playing a part in boosting dividend growth among Asian companies. Better corporate governance encourages companies to concentrate on capital efficiency, profitability and appointing independent directors onto company boards.

The Asia Pacific region includes developed countries such as Singapore and Australia, alongside emerging countries like China and Taiwan, for example. Large-cap Australian companies, particularly in the financial sector, are well capitalised and have track records of paying consistent dividends. Often more developed countries make up a large proportion of any Asian income fund, which may help offset the risk from holdings in some of the smaller, less developed emerging market economies.

Companies based in Japan and Korea typically offer lower dividend payouts, but this could be set to change. Japanese Prime Minister Shinzo Abe is encouraging companies to increase dividend payouts.

In addition taxes are being increasingly levied on company cash reserves in Korea, which may push companies into paying out dividends to reduce this burden.

Income opportunities in Asia are not only limited to equities. Asian corporate bonds boast attractive yields and thanks to sound balance sheets many Asian companies are finding it much easier to borrow.

What to watch out for?

Investors should proceed with caution when investing in bonds – whilst markets in countries like Hong Kong, Singapore and Korea are more liquid - China, India, Indonesia and Thailand are still developing.

The other downside to investing in Asia in general is that markets can be volatile, with developing countries in this region often having weaker albeit improving standards of corporate governance and regulations to protect investors.

Asian income funds should be considered as a long-term investment and held as part of a balanced portfolio which include funds invested in other geographical regions.

It is also important to consider currency risk when investing overseas. By investing in shares that are priced in currencies other than sterling, any gains could be offset by a fall in the value of that particular currency against the pound. Conversely, if the foreign currency strengthens, this will have a positive impact on returns.

How to invest in Asia?

For investors wanting to gain exposure to Asia, there are a variety of funds to choose from. We have chosen to cover the Newton Asian Income fund because of its tried and tested investment processes which have consistently delivered results. We have also selected the Schroder Asian Income fund because of the managers excellent local knowledge and stock picking skills.


0-12m 12-24m 24-36m 36-48m 48-60m

Newton Asian Income Inst W Inc GBP -2.9 +2.2 +0.6 +48.8 +40.5

IA Asia Pacific Excluding Japan -7.2 -9.6 -8.8 +48.7 +47.2

ASSET ALLOCATION

Newton Asian Income Fund – Income of 4.77% per annum payable quarterly (variable as at 13.11.2018).

Fund Focus

Investing in Asia for Income

CHARGES









Initial Charge 0%





Financials 33%

Industrials 17%

Technology 16%

Telecommunications 12%

Consumer Services 8%

Utilities 6%

Consumer Goods 5%

Basic Materials 2%

Money Market 2%


Historically, companies based in Asia considered that reinvesting surplus cash back into their businesses would yield better returns for shareholders more than a straightforward dividend distribution - for this reason investor interest in the region tended to be focused on growth. Today companies are realising that there is considerable investor demand for dividends, especially if they can increase over time. Deciding to adopt a dividend distribution policy requires a commitment and discipline on capital allocation coupled with timely cashflow generation on the part of companies. It also helps to discourage management from spending everything on business expansion plans such as mergers which can end up not delivering the value promised.

The financial and economic reforms over the last 20 years have resulted in healthy compound growth in a number of Asian economies which has attracted many investors.

The Newton Asian Income fund, now managed by Zoe Kan with assistance from Rob Marshall Lee and Caroline Keen has been popular with investors for a number of years. Since launch in late 2005 the fund had attracted £4.3 billion in assets but a sudden departure to Jupiter of the long standing star manager Jason Pidcock in May 2015 resulted in significant outflows. He had delivered a return of 187.7% during his tenure beating the peer average in the IA Asia Pacific Excluding Japan sector by 33.72%. Although it is always concerning to see a star manager move on, Zoe is very experienced and was instrumental in formulating the investment strategy with Jason. She was clearly a natural fit for the role and her appointment helped to stabilise the outflows. Zoe’s style is a team based approach which she brings from her time in emerging markets research whereas Jason operated more independently.

Zoe assumed responsibilities for the fund in June 2016, right in the middle of a strong run which owed much to the technology sector.

One of her first decisions was to reduce exposure to this sector, which was likely to result in underperformance over the short term.

The call has been vindicated as over the course of the past 18 months it has markedly outperformed its benchmark. The fund has approximately a quarter of its assets invested in Australia which is a key differentiator to others in the sector.

Zoe has strived to maintain the long standing thematic approach to identify forces of change and long-term trends. She works with Newton’s global research analysts (comprising of 20 specialists) to understand sectors and themes, while also using her own experience to select stocks for the portfolio. She primarily invests in well managed companies with attractive dividend prospects but also likes to favour companies she believes have the potential for both income and capital growth over the long term.

PERFORMANCENewton Asian Income Inst W Inc GBP

IA Asia Pacific Excluding Japan

FUND FACTS

Fund Size £1196.325m

Fund Type OEIC



Yield 4.77%

Dividend Dates January, April July & October


75%

50%

25%

0%

-25%

2014 2015 2016 2017 2018

Performance %

% Net Assets


CHARGES









Initial Charge 0%





ASSET ALLOCATION

0-12m 12-24m 24-36m 36-48m 48-60m

Schroder Asian Income Z Acc -4.7 -4.9 -2.2 +52.5 +56.9

IA Asia Pacific Excluding Japan -7.6 -9.5 -8.6 +47.3 +47.2

Schroder Asian Income Fund – Income of 4.15% per annum payable half-yearly (variable as at 15.11.2018).


Financials 22%

Information Technology 19%

Real Estate 15%

Telecomm. Utilities 10%

Materials 9%

Consumer Discretionary 8%

Energy 6%

Industrials 4%

Money Market 3%

Others 3%

PERFORMANCE

Fund Focus

With fast-growing economies, strong export markets and an increasingly wealthy middle class, there is no denying Asia’s potential. Middle class consumers are very important to economic growth in today’s world and in less than 20 years, it is predicted that Asia will have 10 times more middle-class citizens than the US and five times more than Europe. Many diversified portfolios now include an exposure to the region and with bonds and equities in developed markets jittery as we approach the latter stages of a long bull market, Asia is becoming more attractive for investors.

The fund is managed by Richard Sennitt who joined Schroders in 1993 as an analyst on the Japanese desk before moving to the Asia Pacific team. In 2001 he was given the opportunity to put his skills to the test by taking sole control of the fund and since then has consistently performed well against the benchmark.

Asia comprises both developed and emerging countries with varying geopolitical risks which many fund managers have to take account of. Richard’s investment approach is slightly different. He is a true stock picker at heart and sometimes is quite happy to take what others consider to be risky investment decisions.

As an example, he will routinely develop a negative view on a particular country but this will not necessarily result in a change of his stock allocation. Thailand is a good example where from time to time there is political upheaval but in spite of the tensions Richard will choose to maintain a substantial exposure to the country.

Richard likes to keep things simple and among his many criteria is sustainability of a company’s dividend. Performance wise, Richard may undershoot some of his punchier rivals on growth, but he is more

than a match on yield. The fund typically holds 60 to 80 companies in Asia excluding Japan with substantial allocations to Hong Kong, Australia and Taiwan in sectors such as information technology and financials.

Schroder Asian Income Z Inc

IA Asia Pacific Excluding Japan


% Net Assets

FUND FACTS

Fund Size £1335.432m




Yield 4.15%

Dividend Dates January & July

1400%

1200%

1000%

800%

600%

400%

200%

0%

Feb 1991 Jan 1994 Jul 1998 Jan 2003 Jul 2007 Jan 2012 Jul 2016

Performance %

Investing in Asia for Income



Thematic Investing What is it all about?

The world is forever changing and adapting to the needs of its population. Corporations and governments look at what is driving change over the long term to ensure their strategies meet the changes coming down the tracks. Identifying these “themes” is key to their development plans – today, there are five major (macro) themes that are reshaping society and encouraging economic growth.

Ageing & Lifestyle

• Silver spending• Wellness and prevention• HealthTech

Ageing populations are becoming a global phenomenon, with the number of older people (60+) expected to more than double to 2 billion by 2050. Those companies that are linked to healthcare and consumer spending will benefit as a result.

Connected Consumers

• E-commerce and Financial Technology• Software and “The Cloud”• Artificial Intelligence & Analytics

The digital era is still in its infancy when you consider that only 9% of global retail sales are transacted online. Internet retailing however is expected to grow at an average rate of 14% over each of the next 5 years (Source: Citi GPS: Technology at Work – August 2017).

Millennials (those under 35) have grown up with the internet and are comfortable with shopping online – they are also just about to enter their peak spending years.

Automation

• Robotics• Internet of Things• Energy efficiency

The use of robotics in society will increase efficiency, precision and safety. It is estimated that the global robotics market is expected to grow by 10-15% a year until 2025. Robots are becoming more mainstream while labour costs are increasing and the working population is shrinking in many countries. Innovation creates opportunities in new industries such as autonomous vehicles, food processing and agriculture.

Clean Technology

• Clean Energy• Smart Grid• Sustainable resources

Political, economic and technological changes are structurally altering the global landscape in the power, utility and resource markets. Social pressure, demographic changes and international agreements are driving policy support for improved environmental stewardship with notable progress being made in China.

Transitioning Societies

• Social Mobility• Basic needs• Urbanisation

Over the next three decades it is estimated that 3 billion people around the world will move from poverty into “middle class”. Growing wealth is enabling demand for goods and services which fulfil basic needs and urbanisation increases the need for new infrastructure with the accompanying change in lifestyle creating new opportunities.

A new way of investing?It may be a surprise to learn that thematic investing is not a new strategy and has in fact been used by fund managers for some time. It is however gaining more attention from investors as a means of diversifying a portfolio and tapping into the growth stories of the future. There are a number of funds available that invest “thematically” for which we can provide further details – one of the longest established is the AXA Framlington Global Thematics Fund which we feature opposite.


Thematic Investing


22/11/2013 – 18/11/2018 Source: FE AnalyticsPast performance is not a guide to future returns.

AXA Framlington Global Thematics Fund – Income of 0.15% per annum payable yearly (variable as at 18.11.2018).

0-12m 12-24m 24-36m 36-48m 48-60m

AXA Framlington Global Thematics Z Acc -2.0 +19.4 +21.1 +1.0 +15.6

IA Global -1.0 +16.7 +21.0 +1.2 +8.3

Launched in 1995, the fund is co-managed by Amanda O’Toole and Mark Hargraves. Both are specialists in Global Thematics and draw on the support and knowledge of a team of like- minded experts.

The fund is actively managed with the focus on investing in companies active in robotics and automation both in the developed and emerging markets. Their screening process reduces the potential universe of companies from which to select to around 500. They exclude companies that manufacture controversial weapons or tobacco and those that provide coal or palm oil.

When selecting a company to buy (or increase their holding), Amanda and Mark use the following criteria:-

• Confidence in the long term strategy of the business

• There is an expectation of material improvement in the trading environment

• There is an expectation of a positive earnings outlook

• There has been a recent management change which has re-energised the business.

The fund invests primarily in large and medium sized companies with between 40 and 60 stocks held at any one time. Because of the long-term view taken by the fund managers, turnover is low and is typically less than 30% which can reduce fund charges. The fund has outperformed its benchmark over a period of time and could be attractive to those that are seeking to introduce some diversification into their portfolio.

CHARGES








FUND FACTS

Fund Size £77m




Yield 0.15%

Dividend Dates Annually


Initial Charge 0%




ASSET ALLOCATION

Information Technology 37%

Health Care 21%

Industrials 13%

Financials 12%

Consumer Discretionary 7%


Utilities 3%

Consumer Staples 3%

Money Market 2%

Materials 2%

Real Estate 1%

AXA Framlington Global Thematics Z Acc

IA Global

Fund Focus

PERFORMANCE

% Net Assets

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

-10%

Nov 2013 Jun 2014 Jun 2015 Jun 2016 Jun 2017 Jun 2018

Performance %



In today’s technology driven world there is an increasing reliance on the electronic storage of both personal and corporate data – records held on paper based files are rapidly becoming redundant. The shift to computer based and internet based storage of data has however also led to it being susceptible to unauthorised access by “cyber criminals” who then use the data to commit further fraudulent activities such as identity theft.

Over the last few years there have been a number of high profile data breaches. These are increasing with the cyber-attacks becoming ever more sophisticated. Recent examples include:-

• British Airways – The airline’s chairman apologised for BA falling victim to what he termed a “sophisticated, malicious criminal attack” that exposed the personal and financial details from 380,000 transactions. Journey and passport information was not affected.

• Dixons Carphone – the electricals retailer said it would be contacting 1.2m customers who had non-financial data such as their name and address taken in the breach. The company also said “there was an attempt to compromise 5.9 million cards” on its systems, although most of those were protected by chip and pin and the data did not include the three-digit CVV verification code on the back of the cards.

• NHS – Hospitals across the country were hit by ransomware demanding a payment of £230 in Bitcoin from each user. The attack was part of a worldwide attack by the WannaCry cryptoworm.

With an increased awareness comes an increase in demand from companies to be better protected from future attacks.

Businesses that are active in supplying hardware and software solutions to keep information secure and consult on where organisations may be at risk will benefit as a result. This is a rapidly growing sector of the global economy with company revenues estimated to rise by 11 per cent a year and global spending to exceed £780 billion between 2017 and 2021 (source: Cybersecurity

Ventures).

A Legislated push in the right direction!

Legislation is also driving the demand for cyber security services. In 2018 the EU General Data Protection Regulation (GDPR) came into force regulating how companies protect EU citizens’ personal data. The regulation gives firms 72 hours to disclose that they have been subject to a data breach once they have discovered it, a move that brought the EU into line with the United States. The penalties for negligence in protecting personal information are severe - fines of up to 4 per cent of annual global turnover or £17.5 million, whichever is larger. The potential fine is a great motivator in ensuring compliance of the regulations.

The combination of online threats and legislation is focusing the attention of many companies – with cyber and physical security topping the list of spending priorities. The effect of a successful cyber attack or data breach can damage a company’s reputation severely affecting future growth prospects and returns for shareholders.

Should I invest in the sector?

The technology that deals with countering the threat of cyber attacks and data protection breaches is evolving constantly. New innovations can wipe out companies that offer an out dated solution and smaller companies will often be absorbed by larger ones in the drive for dominance in the market. The sector is more volatile than most as a result but does provide an attractive proposition for the long term investor.

Pictet Asset Management has spent many years building a very able Thematics team with expertise in a number of areas including security. They have developed very thorough processes and in Pictet Security they offer a globally invested fund which focuses on delivering capital growth.

How safe is your data?

Invest in companies that are working to protect you



Pictet Security Fund

0-12m 12-24m 24-36m 36-48m 48-60m

Pictet Security I dy GBP +2.1 +14.6 +22.7 +12.1 +14.4

IA Global -1.0 +16.7 +21.0 +1.2 +8.3

Feeling safe and secure is a fundamental human need. Security is becoming increasingly important to governments, businesses and individuals around the globe. From protecting against cyber-attacks and guarding vital infrastructure to food safety and personal security, companies able to meet challenges linked to security will represent attractive long-term opportunities for investors. The Thematics team at Pictet identified these opportunities some time ago and as a result launched the Security Fund in 2006.

The fund is currently managed by Alexandre Mouthon, Rachele Beata and Yves Kramer, with Yves having been linked to the fund since its launch. The fund has a worldwide mandate investing in companies providing safety and security products for systems, people or organisations.

The portfolio comprises of 50 to 75 stocks at any one time which are selected from

a pool of around 250 security-related companies. Risk to the portfolio is managed by combining those that are considered more defensive in nature with those that offer perhaps the more exciting growth opportunities. Companies whose activities are linked to the military, weapons or nuclear power are excluded from the selection process.

The management team is also able to call upon the expertise of a dedicated advisory board comprised of eminent scientists, business leaders and academics. This enables them to test their views against experts in their respective fields and provides a deeper understanding of the regulatory environment. Geographically, nearly three quarters of the portfolio is invested in the United States where the majority of the cyber security companies are based. The next two largest allocations are in the UK (6.6%) and Japan (5.76%).

Despite the uncertainty of the global economy, Pictet consider securing critical infrastructure of countries, protecting citizens’ data and ensuring the ability of businesses to meet their objectives remains a top priority. As such they remain confident about the ability of the fund to outpace the global equity market over the next few years with stricter regulation (GDPR) being a key driver.

CHARGES








FUND FACTS

Fund Size £4,465m

Fund Type SICV



Yield 0%

Dividend Dates Annually


Initial Charge 0%




ASSET ALLOCATION

Thermo Fisher Scientific 5%

Fiserv Inc. 4%

Fidelity Nat. Info Services 4%

Global Payments Inc. 3%

WireCard AG 3%


EcoLab Inc. 3%

Total Systems Services Inc. 3%

Palo Alto Networks Inc. 3%

Alegion Plc 3%

Fortinet Inc. 3%

Pictet Security I dy GBP

IA Global

PERFORMANCE


How Safe is Your Data?

Fund Focus

% Net Assets

110%

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

-10%

Nov 2013 Jun 2014 Jun 2015 Jun 2016 Jun 2017 Jun 2018

Performance %



Inheritance TaxCould you save

and help resolve the UK’s productivity puzzle?

Since the financial crisis the UK has suffered from a collapse in productivity that has left economists and the government scratching their heads. This is a worldwide conundrum, but the UK is being dramatically outstripped by peers such as the US, Germany and France in this area. The potential reasons for this are complex but we feel that one of the main reasons is the lack of investment in innovation by some UK corporations.

Corporate giants are not helping productivity

Until recently, low interest rates have made it far too easy for large corporates to issue debt at extremely low yields and use this capital to buy back shares. This increases the earnings per share and ultimately the share price. This open goal is taken repeatedly, by management teams, because of a heavy link between executive pay and the company’s share price. However, this is not necessarily the best route for large corporations’ long-term growth prospects.

This all comes at the cost of productivity-enhancing investment, which is a riskier route to take in an uncertain, post financial-crisis world. With the world economy struggling to grow, it is difficult to see how larger companies intend to organically increase their revenues with their limited capital expenditure. In turn, this is contributing to the lag in productivity figures.

Could the AIM market and small companies save the day?

In contrast, many AIM (Alternative Investment Market) listed and smaller companies are exploring ways to be more effective than their larger peers. This is often because they are aiming to disrupt markets and grab market share. They are coming from a lower base, than giant corporates, and there is a lot of blue sky for them to aim at.

AIM companies are often led by entrepreneurs who have a substantial shareholding. These business leaders are looking for long-term company growth and are therefore willing to invest to ensure the company moves into a more competitive position. Smaller companies are also more manoeuvrable, due to their size, and can make changes with less bureaucracy.

In addition, AIM is home to a large number of cash generative companies that have innovative technologies which are naturally going to improve efficiencies for other corporations. Examples include robot automation, new telecommunications solutions and much more.

Research has shown that “diseconomies of scale” (where productivity within a business starts to drop when a firm’s size or output gets too big) does exist and this is one of the major advantages for small to medium size companies. Again, this helps to drive productivity and therefore the UK economy.

Potential risks and benefits of smaller company investing

The media can often focus on the negative side of investing in smaller companies, saying that these businesses are risky and can lack the quality of their large cap peers. These concerns are sometimes justified

and a reason why investors should be particularly diligent when investing in this area. AIM in particular has a more flexible regulatory system than is applicable to the Main Market and therefore particular care should be taken. Examples such as Patisserie Valerie and Conviviality demonstrate the risks involved when investing in companies listed on the AIM market. However, the Patisserie Valerie scandal looks like it is fraudulent and therefore this would probably have happened even if it was listed on the main market. Larger companies are also not immune to the potential destruction of shareholder value as demonstrated earlier this year by the collapse in Carillion.

What often isn’t considered by investors is that most commonly held funds are not investing in smaller companies and the businesses listed on AIM. This means that increasing exposure to this area of the market can often help diversify an investor’s equity portfolio. In addition, smaller companies often garner less attention from professional investors, which means that there is a high probability that these stocks are improperly priced. This market inefficiency, caused by the lack of coverage of this area of the market, can create more risk but also the opportunity to unearth some hidden gems.

“...an AIM portfolio can

achieve exemption from

inheritance tax when

held for just two years

and at time of death.”


Charles Stanley Inheritance Tax Service

Want to find out more?To find out more about the Charles Stanley Inheritance Tax Portfolio Service and how it could help you reduce your Inheritance Tax liability, return the response slip enclosed with details of how we can best contact you. The minimum investment is for £100,000 (which can include transfers from ISAs).

As with any tax planning, people should consider taking financial advice.

The information contained within this article is based on our understanding of current UK Legislation, Taxation and HMRC guidance, all of which may be subject to change. Nothing contained within this article should be construed as personal advice based on individual circumstances.

AIM as a tool for mitigating Inheritance Tax

The government supports AIM because of the potential boost to productivity and job creation. Many AIM stocks qualify for Business Relief meaning that an AIM portfolio can achieve exemption from Inheritance Tax when held for just two years and at time of death. In addition, AIM shares can be held in an ISA and, unlike their fully listed peers, are free from stamp duty.

Charles Stanley operates an AIM Inheritance Tax service, which looks to mitigate inheritance tax for investors. If you would like to hear more about this service then please complete the enclosed response form.

Key Benefits

• IHT Relief – No Inheritance Tax on the invested assets after two years

• Speed – The assets can become exempt from IHT faster than many other forms of estate planning

• Maintain Control – You maintain access to the capital and the income derived from it

• Simplicity – AIM portfolios are straightforward and do not involve some of the legal complexities of other IHT solutions

• ISA Eligible – AIM shares can be held in an ISA

• Growth Potential – AIM is home to many innovative, growth companies that have become leaders within their respective fields

Key Risks

• Your Capital is at risk – The value of your investments can go up and down and you may not get back the full amount invested. AIM-listed shares involve more risk than investing in shares listed on the main market of the London Stock Exchange.

• Volatility – The performance of AIM-listed shares tends to be more volatile, which means their value can rise and fall greater amounts on a day-to-day basis.

• Tax Relief Not Guaranteed – The benefit of tax relief depends on the individual circumstances of each investor. Tax rules could change in the future, and the availability of tax relief also depends on the companies we invest in maintaining their qualifying status, which is assessed at the point of a claim for the relief to be made.

• Your investment could take longer than expected to sell than expected – Shares in AIM-listed companies are not as easy to buy and sell as companies listed on the main market. This means that the availability and timing of withdrawals from the service cannot be guaranteed.



Nice to meet you...Charles Stanley Investment Choices & Charles Stanley Financial Planning Seminar 3rd October 2018Photography courtesy of Rachel Cameron.

We are constantly looking to enhance the services that we provide to our clients and have been working closely with the Financial Planning division of Charles Stanley over the course of the last year. To date this has been limited to information provided in our quarterly magazine and how their experienced team can assist all clients with their financial planning requirements. Many of you have taken advantage of the initial free consultation which will continue to be available for the foreseeable future.

On the 3rd October 2018, we held our inaugural seminar at Tickton Grange, just outside of Beverley in collaboration with our Financial Planning colleagues to further promote the services that the Charles Stanley Group can provide clients. The event was extremely well attended and comprised of presentations from Mark Feely (Head of Charles Stanley Investment Choices), Paul Abberley (Chief Executive Officer – Charles Stanley & Co), Andrew Meigh (Director of Financial Planning) and last but not least John Redwood (Global Strategist for Charles Stanley and of course, well known Conservative MP).

All of the presentations were well received by the audience and it was clear from the feedback that these events are very welcome and we should hold more. We are

delighted therefore to be able to confirm that we have committed to providing further seminars in 2019-20, details of which you can find on page 25.

It was clear from the conversations with attendees that many clients are not comfortable with the “rush towards digital services” and that the option to speak to someone is very important to them. Whilst Charles Stanley Investment Choices has an online presence our business model is very much designed around developing investment relationships over a period of time – getting to know clients and their investment aspirations.

“Many of you have

taken advantage of the

initial free consultation

which will continue

to be available for the

foreseeable future.”


Charles Stanley Financial Planning Seminar

Our colleagues in Financial Planning operate in a similar way and we look forward to working with them to provide the best services for all clients in the future.

As a reminder, Charles Stanley Financial Planning services include:

• Pension and Retirement Planning• Inheritance Tax Planning• Tax efficient savings• Long term care planning• Wealth Protection• Life events• Personal and family protection

If you would like to arrange an initial consultation, please complete and return the enclosed response form.

Future seminarsWe will be holding seminars at the following regional locations in partnership with the Financial Planning team during 2019/20

Leeds – FebruaryNottingham – MayBrighton – SeptemberYork – February 2020 Please indicate which event you would like to attend by returning the response form enclosed naming your favoured venue.



Financial Planning

Charles Stanley

Services for you...

Charles Stanley has been providing financial peace of mind for generations and is one of the leading wealth managers in the United Kingdom, with assets under management and administration of some £25 billion (as at 30th September 2018).

We would like to make you aware of the range of financial planning services that we provide and to offer you a free, no obligation, initial consultation with one of our professional financial planners.

Taking financial advice can save you time and effort; it can also give you the peace of mind that you are making the right financial decisions now, and for the future. There are times when advice can be essential rather than simply useful. In particularly complex situations, expert knowledge may be required to structure your affairs appropriately and maximise the opportunities available.

Investing a lump sum

As well as making sure your money is working as hard as possible, a financial planner can help you make the most of tax allowances and reliefs. This is particularly relevant today given the changes to the taxation of dividends, buy to-let property and savings.

Large or complicated pensions

From 6 April 2016, the lifetime allowance changed; the amount you can build up in your pensions without paying tax of up to 55%, was reduced from £1.25 million to £1 million, potentially affecting many unsuspecting investors. It can be easy to overlook how much of the lifetime allowance you have used, or will use up, particularly with regard to Defined Benefit pensions; for example a final salary pension of £25,000 a year uses £500,000 of a lifetime allowance.

Your financial planner can help you check the values of your pensions against the lifetime allowance and potentially help apply for protection against the drop. They could also help with analysing whether it is appropriate to consolidate your pension pots. The taxation of pensions and investments

“Taking Financial advice

can save you time and

effort; it can give you

the peace of mind that

you are making the right

financial decisions now,

and for the future.”

Charles Stanley Financial Planning - a world of differenceThe scope of our financial planning services:

• Pension and Retirement planning

• Inheritance Tax planning

• Tax efficient savings

• Long-term care planning

• Wealth protection

• Life events

• Personal and family protection


Charles Stanley Financial Planning

depends on individual circumstances and is subject to change in the future.

Retirement planning

With life expectancy rising, many more of us will be living into our 80s and 90s, potentially increasing the number of years we will spend in retirement. A financial planner can assist you in working out how much you need to retire comfortably, and assess your existing finances to see whether you are on track to meet your goals. If you are approaching retirement age, they can also tailor a retirement plan using cash flow modelling to generate a sustainable level of income from pensions and other sources.

Inheritance Tax planning

There are a number of ways you can reduce a potential Inheritance Tax liability including making annual gifts. However, as your estate gets larger and more complex, advice from a professional can help guide you through the options for passing on your

wealth. If you own multiple properties or have significant business interests, this could be especially important.

Charles Stanley – Focusing on You

At Charles Stanley we provide a personal service and pride ourselves on our commitment to our clients. Our financial planners have a wealth of knowledge and experience and can help you with a wide range of services.

We tailor our advice to suit our clients’ needs whether it is for one off piece of advice or ongoing service advice, we tailor it to suit the clients needs.

Our financial planning team offer a free, initial consultation which is designed to help you find the right service for you. There is no obligation for you to use our services, however, if after your initial consultation you wish to proceed with financial advice, your financial planner will advise you of the next steps and fees involved.

The information contained within this article is based on our understanding of current UK Legislation, Taxation and HMRC guidance, all of which may be subject to change. Nothing contained within this article should be construed as a personal advise based on individual circumstances.

To arrange your initial consultation please complete and return the enclosed response form.

“Our financial

planning team

offer a free, initial

consultation which is

designed to help you

find the right service

for you.”

Important Information

Past performance is not a reliable indicator of future results and the value of investments and income from them may fall as well as rise. The capital invested is therefore at risk and the amount realised may be less than the original sum invested. Investments should be considered for the medium/long terms (five years or longer).

This document is a marketing communication. The information does not constitute advice or a personal recommendation or take into account the particular investment objectives, financial situations or needs of individual investors. If you are unsure as to whether an investment or a pension is suitable for you, please seek professional financial advice.

Before you invest and for your own protection,

please ensure you have read carefully the documents enclosed with this publication (the Aegon application and other documents).

It is recommended that you also review the available product literature. On receipt of your application, where relevant, a Key Investors Information Document (KIID) will be sent to you containing further specific information on each of the funds in which you wish to invest. If you are investing online, the Funds Key Features/KIID will be available at the point of purchase.

For funds that invest overseas, exchange rate variations may cause the value of your investments to rise or fall. Investments in certain funds, including emerging markets, specialist geographical areas, smaller companies and specialist sectors (such as technology and ethical stocks) tend to be more

volatile. Where a fund’s objective is to provide income and the income is paid out, there can be a reduced potential for capital growth, especially over the medium to long term. The level of income payments can vary and where a bond fund’s running yield is greater than the redemption yield, this may erode capital.

Some funds invest in higher risk fixed interest securities, known as sub-investment grade bonds. These bonds have a low credit rating and higher risk of default than investment grade bonds. This means that there is an increased risk that the value of your investment could fall. The tax treatment of investments and pensions depends on individual circumstances and may be subject to change in the future. Fund switches outside of an ISA wrapper constitute a realisation for capital gains tax purposes.

Get in touch 01482 861455

5/7 Landress Lane, Beverley, East Yorkshire, HU17 8HA

[email protected]


How to invest

If you would like to discuss the

investments described in this

newsletter, or need help completing

the application forms, please get in

touch - we’re here to help!

1.

2.

3.4.


Identify the fund(s) you wish to invest into – feel free to call us to discuss

these funds in more detail.

Complete the application form enclosed and return it to us in the pre-paid envelope

provided. Alternatively, logon to your account online or call us with your debit card

details. If you want to invest monthly please also complete the Direct Debit Mandate

attached to the ISA application form.

Should you wish to invest outside of an ISA please contact us for an application form.

If you do not have an existing ISA with Aegon, please contact us for an application

pack.

York Minster, York,North Yorkshire.

Charles Stanley Investment Choices is a trading name of Charles Stanley and Co. Limited, which is authorised and regulated by the Financial Conduct Authority.

A member of the London Stock Exchange and a wholly owned subsidiary of Charles Stanley Group PLC. Charles Stanley & Co. Limited is registered in England No. 1903304.

Registered Office: 55 Bishopsgate, London, EC2N 3AS.

charles stanley issue 10 investment choices news · 2019-02-15 · charles stanley investment...

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