Hybrid Portfolio Objectives HYBRID PORTFOLIO OBJECTIVES APRIL 2017 UPDATE

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1 Hybrid Portfolio Objectives HYBRID PORTFOLIO OBJECTIVES APRIL 2017 UPDATE

2 Risk Level 1 - Cautious This portfolio is designed for a cautious investor who is primarily concerned with capital preservation and regards any growth as a bonus. It should exhibit stable and consistent performance, experiencing neither large rises nor falls in its value. The portfolio will generally have a broad range of assets to increase diversification and reduce overall risk. The investor should be prepared to accept that their portfolio may struggle to keep pace with inflation, and therefore could lose value in real terms due to its cautious positioning. Alternative Assets 30.00% Fixed Income 25.00% Global Developed Equity 5.00% Money Market 35.00% UK Equity 5.00% This portfolio is predominantly invested in defensive asset classes such as cash and fixed income. These provide low levels of growth but high levels of capital protection. Cash should be considered the most defensive asset class, meaning it is unlikely to fall in value, but will likely lose money in real terms. Exposure to fixed income and alternative assets should provide small but consistent returns. Only a small percentage of the portfolio is invested in the growth asset classes such as equities, meaning over the long term the portfolio is likely to lose value in real terms. The portfolio has been designed for investors who wish to be able to encash their investments within a few short years with there being little chance experiencing a loss. Hybrid Risk Level 1 Short % 5.19% 11.61% 21.96% IA Mixed Investment 0%-35% Shares % 9.38% 15.49% 26.28% Alternative Assets 15.00% Fixed Income 46.00% Global Developed Equity 21.00% UK Equity 13.00% This portfolio is predominantly invested in fixed income, which is considered a cautious asset class although not as defensive as cash, meaning periods of loss are possible. Generally, it will provide small but consistent levels of returns. This will mainly be driven by the portfolio s exposure to equities, which provide high growth but are high risk. Exposure to this asset class will be strictly limited to developed economies with no exposure to the high-risk area of emerging markets or smaller companies. Although this should be considered a defensive portfolio, investors should be prepared to lock their money away for a reasonable period to lessen the impact of short-term market fluctuations. Nevertheless, the investor can be reasonably confident of avoiding heavy losses. Hybrid Risk Level 1 Medium % 11.17% 19.80% 30.10% IA Mixed Investment 0%-35% Shares % 9.38% 15.49% 26.28% Alternative Assets 11.50% Fixed Income 45.00% Global Developed Equity 28.50% UK Equity 15.00% This portfolio has a long time horizon, meaning despite its defensive nature, it is only suitable for investors who are prepared to lock their money away for a significant period to limit the impact of short-term fluctuations. This is due to the portfolio s equity exposure, which helps drive long-term returns but can experience large losses in the short term. Equity exposure is strictly limited to developed economies with no exposure to emerging markets or smaller companies, which are considered too high risk. Stability is provided through exposure to more cautious asset classes such as fixed income, although the portfolio avoids any exposure to cash as this is too defensive for such a long-term portfolio. Hybrid Risk Level 1 Long % 13.49% 27.41% 44.55% IA Mixed Investment 0%-35% Shares % 9.38% 15.49% 26.28%

3 Risk Level 2 - Cautious to Moderate This portfolio is designed for a cautious to moderate investor looking to make a positive return on their initial outlay but for whom capital preservation remains a principal concern. To achieve this goal the investor should be prepared to place some of their capital at risk to boost returns. The investor will generally be aiming to produce real returns above the level of inflation; to achieve this, they will be happy to have greater exposure to equity markets and less exposure to defensive assets, such as cash, than a risk level 1 investor. Alternative Assets 29.00% Fixed Income 29.00% Global Developed Equity 6.50% Money Market 20.00% UK Equity 10.50% This portfolio is predominantly invested in defensive asset classes such as cash and fixed income. These provide low levels of growth but high levels of capital protection. Cash is the most defensive asset class, meaning it is unlikely to lose money but is unlikely to keep pace with inflation. Defensive exposure through fixed income and alternative assets is likely to provide low but consistent levels of returns. The portfolio has some exposure to equities, which are higher risk but should help to ensure the portfolio grows in real terms. The portfolio has no emerging market exposure, which is considered too high risk. The portfolio has been designed for investors who wish to be able to encash their investments within a few short years with relative confidence. Hybrid Risk Level 2 Short % 9.59% 18.12% 30.77% IA Mixed Investment 0%-35% Shares % 9.38% 15.49% 26.28% Alternative Assets 5.00% Fixed Income 39.00% Global Developed Equity 32.50% UK Equity 18.50% This portfolio has a strong core of cautious asset classes, although there is no exposure to cash meaning periods of loss are possible. Returns will mainly be driven by the portfolio s exposure to equities, which will drive returns but are high risk. Exposure is limited to developed economies. To maximise stability a significant portion of the portfolio is invested in fixed income and alternative assets, which should provide low but consistent returns, making them ideal for a portfolio of this risk level and time horizon. Although the portfolio is positioned relatively cautiously, investors should be prepared to lock their money away for a reasonable period to lessen the impact of short-term market fluctuations. Hybrid Risk Level 2 Medium % 13.35% 26.08% 45.63% IA Mixed Investment 20%-60% Shares % 12.90% 19.58% 36.57% Fixed Income 39.00% Global Developed Equity 33.00% UK Equity 23.00% This portfolio has a long time horizon, meaning despite its moderately cautious nature, it is only suitable for investors prepared to lock their money away for a significant period to limit the impact of short-term fluctuations. This is due to the portfolio s equity exposure, which helps drive long-term returns but can experience large losses in the shortterm. Exposure is strictly limited to developed economies as emerging markets are considered too high risk. Stability is provided through exposure to more cautious asset classes such as fixed income and alternative assets. These generally provide lower returns than equities but provide greater stability. The portfolio has no exposure to cash, which is deemed too defensive for the portfolio s long time horizon. Hybrid Risk Level 2 Long % 16.07% 30.71% 54.22% IA Mixed Investment 20%-60% Shares % 12.90% 19.58% 36.57%

4 Risk Level 3 - Moderate This portfolio is designed for a moderate investor, where capital protection is considered less of priority than achieving a positive return on the investment. To achieve this the investor should be prepared to place a significant portion of their money into higher risk investments such as equities and property, rather than lower yielding but safer asset classes such as fixed income and cash. This means that they should be prepared for their investments to lose money in unfavourable markets. Alternative Assets 5.00% Fixed Income 32.50% Global Developed Equity 25.00% Money Market 20.00% UK Equity 17.50% Despite the portfolio s moderate focus, the short time horizon means it is important that the portfolio is invested across a wide range of asset classes to help control the overall level of risk. Cash can be considered the most defensive asset class, providing strong capital preservation, but is likely to lose value in real terms. Exposure to fixed income and alternative assets should provide low but consistent levels of returns. The main driver of returns will come from the equity exposure, which is split between the UK and other developed countries. There is no exposure to emerging markets, which are considered too high risk. The moderate nature of the portfolio means that periods of loss are possible, nevertheless the wide range of asset classes mean that it should be possible to encash their investments within a few years. Hybrid Risk Level 3 Short % 11.11% 21.28% 34.45% IA Mixed Investment 20%-60% Shares % 12.90% 19.58% 36.57% Fixed Income 32.50% Global Developed Equity 42.00% UK Equity 20.00% Property 5.50% This portfolio is predominantly invested in equities, which as a highrisk, high-growth asset class are aiming to be the main driver of portfolio returns. Exposure is strictly limited to developed economies, as emerging markets are considered too speculative. The portfolio has some exposure to fixed income, which generally provides lower but more consistent returns and should help to provide some protection to the portfolio in unfavourable markets. Although the portfolio aims to provide sustained growth rates there will be bumps along the way, which investors should be prepared to tolerate. Investors should be prepared to commit their money for a reasonable period to mitigate the impact of short-term market fluctuations. Hybrid Risk Level 3 Medium % 19.90% 33.19% 56.35% IA Mixed Investment 40%-85% Shares % 17.11% 25.75% 49.66% Fixed Income 25.50% Global Developed Equity 40.00% UK Equity 24.50% Property 10.00% This portfolio has a long time horizon, meaning despite its moderate nature the portfolio is likely to experience large swings in value over the short term, meaning periods of significant losses are possible. The portfolio is only suitable for those who are prepared to lock their money away for a significant period, to minimise the effect of such occurrences. The portfolio is expected to show strong growth in rising markets, but may experience large dips in unfavourable markets. A significant portion of the portfolio is invested in equities of the world s most developed economies, as these offer good prospects for growth over the long term despite their high-risk nature. There is no exposure to emerging markets, which are considered too high risk, whilst exposure to fixed income will add some protection in falling markets. Hybrid Risk Level 3 Long % 21.70% 38.48% 68.98% IA Mixed Investment 40%-85% Shares % 17.11% 25.75% 49.66%

5 Risk Level 4 - Moderate to Adventurous This portfolio is designed for those who wish to take a reasonably high level of risk with their investments in return for the prospect of improving longterm performance. Short-term capital protection should not be a concern for the investor and they therefore should be prepared to sacrifice some longterm protection for the likelihood of greater returns. This means that the investor should not be surprised by large falls in the value of their portfolio in unfavourable markets. The portfolio will be predominantly invested in equities with other assets providing some diversification. Alternative Assets 5.00% Fixed Income 27.00% Global Developed Equity 36.00% UK Equity 22.00% Despite its short time horizon, the portfolio is designed for those who are prepared to take an above-average level of risk. The portfolio is predominantly invested in equities, as these offer the prospect of higher returns, despite their high-risk nature. Exposure is strictly limited to developed economies as emerging markets are considered too speculative for a short-term investor. Property 10.00% The portfolio has a reasonable exposure to bonds, which help to spread the risk and provide some stability to the portfolio. Despite this allocation, this is a reasonably aggressive portfolio that will have large peaks and troughs on its generally upward trajectory. Hybrid Risk Level 4 Short % 21.00% 31.89% 51.99% IA Mixed Investment 40%-85% Shares % 17.11% 25.75% 49.66% Fixed Income 11.00% Global Developed Equity 44.50% UK Equity 30.00% Property 9.50% Emerging Markets 5.00% The portfolio is almost entirely invested in equities, which offer the prospect of high returns, but are also high-risk. For the investor capital protection is less of a priority than maximising returns, meaning that they should be prepared to lock their money away for a reasonable period to reduce the impact of short-term market fluctuations. The portfolio has limited exposure to the specialist area of emerging markets. It can be considered a speculative investment; however, it does offer the prospect of producing returns far above developed markets. The portfolio includes a limited exposure to fixed income to help spread the risk. The strategy should lead to higher overall growth rates, although there is the potential for heavy losses in the short term when markets fall. Hybrid Risk Level 4 Medium % 25.21% 43.06% 73.06% IA Mixed Investment 40%-85% Shares % 17.11% 25.75% 49.66% Fixed Income 11.50% Global Developed Equity 52.50% UK Equity 21.00% Property 10.00% Emerging Markets 5.00% Investors in this portfolio should be prepared to lock their money away for a significant period. Short-term capital protection is only a minor consideration, meaning that heavy losses are possible in the search for growth. To maximise the long-term potential returns, the majority of the portfolio is invested in equities. Most of these will be in blue chip stocks of developed economies, but the portfolio will also have some exposure to more specialist areas such as emerging markets and smaller companies. These have the highest growth potential, but are also the most volatile, with large price movements expected in the short term. Limited exposure to fixed income provides some capital protection and allows aggressive equity exposure elsewhere. Hybrid Risk Level 4 Long % 25.61% 38.75% 68.54% IA Flexible Investment % 19.05% 27.16% 49.34%

6 Risk Level 5 - Adventurous Investors at this risk level are prepared to take a substantial amount of risk with their investments in return for the highest possible returns. As an investor, you must appreciate that there will be periods of significant falls in the value of your investments, as well as rises, with a risk that you may get back less than you invested. Over the short term this strategy holds significant risk. The high-risk nature of the investment means that it will be invested predominantly in equities, with perhaps some exposure to more specialist areas, which are considered higher risk than traditional equities. Global Developed Equity 75.00% UK Equity 20.00% This portfolio is almost entirely invested in equity markets, with the majority of these in blue chip stocks listed in the major developed markets. The portfolio does not have any exposure to specialist equities as these are deemed too much of a gamble given the portfolio s short time horizon. Investors should be aware that the portfolio s high-risk nature and short time horizon mean that it is possible investors could get back less than they originally invested if markets prove to be unfavourable. Overall the strategy will lead to strong returns in up markets, but investors must take into consideration the potential for heavy losses. Hybrid Risk Level 5 Short % 28.37% 47.94% 78.93% IA Flexible Investment % 19.05% 27.16% 49.34% Global Developed Equity 79.50% UK Equity 10.50% Emerging Markets 5.00% This portfolio is almost entirely invested in equities, which offer the prospect of high returns but are also considered high risk. The portfolio has some exposure to more speculative specialist areas such as emerging markets. For this reason, investors should be prepared to commit their money for a reasonable period to reduce the chance of experiencing a loss. Capital preservation is not a concern and the portfolio will experience heavy losses in a falling market with the portfolio having no exposure to defensive asset classes. The strategy should lead to strong returns, although investors need to take into consideration the potential for heavy losses. Hybrid Risk Level 5 Medium % 30.79% 42.59% 68.77% IA Flexible Investment % 19.05% 27.16% 49.34% Global Developed Equity 75.00% UK Equity 10.00% Emerging Markets 10.00% This portfolio should be considered highly speculative and is therefore only suitable for those who are prepared to risk a large portion of their investment for the prospect of maximising returns in a favourable investment environment. The portfolio has no exposure to any cautious or defensive asset classes that would provide protection in a falling market and therefore investors should be prepared for the prospect of heavy losses in certain circumstances. For this reason, investors, should be prepared to lock their money away for a significant period. The portfolio is invested almost entirely in equities, a high-risk, highreturn asset class. The portfolio has some exposure to the more specialist area of emerging markets; this offers the prospect for higher returns but tends to be more volatile in the short term. Hybrid Risk Level 5 Long % 30.19% 43.09% 67.07% IA Flexible Investment % 19.05% 27.16% 49.34%

7 Important Information Max Drawdown: This is the worst possible return over the period that the portfolio could have made, it therefore measures the loss made if you had invested at the top of the market and sold at the bottom. Volatility: Standard deviation is a statistical measurement which, when applied to an investment fund, expresses its volatility, or risk. It shows how widely a range of returns varied from the fund s average return over a particular period. Low volatility reduces the risk of buying into an investment in the upper range of its deviation cycle, then seeing its value head towards the lower extreme. For example, if a fund had an average return of 5%, and its volatility was 15, this would mean that the range of its returns over the period had swung between +20% and -10%. Another fund with the same average return and 5% volatility would return between 10% and nothing, but there would at least be no loss. Time Horizons: For a short time horizon an investor should be looking to have their money invested for between 3 to 7 years. A medium term investor should be looking to keep their money invested for between 7 and 15 years and a long term investor for 15 years plus. Performance: All performance figures are calculated on a bid to bid total return basis in pounds sterling to last quarter end. Asset Breakdown: For this calculation a fund is assumed to invest 100% in any one asset class. For example a fund in the IMA UK All Companies sector would be classifed 100% UK Equity. A mixed investment fund would be classifed as 100% Mixed. Portfolio: The portfolio is reviewed every 6 months according to FE s Portfolio Review in March and September. Prior to June 2012 the portfolio is made up of synthetic history which was calculated as if no information was available regarding future investment performance. Performance: All figures are calculated on a bid to bid total return basis in pounds sterling from the launch of the portfolio on the 1st September 2008 and are calculated to quarter end. Volatility figures are annualised figures. Document Production: This document is produced on a quarterly basis in January, April, July and October using previous month end data. This document has been prepared for general information only. It does not contain all of the information which an investor may require in order to make an investment decision. If you are unsure whether this is a suitable investment you should speak to your financial adviser. This information is not guaranteed to be correct, complete, or accurate. FE Research is a division of Financial Express Investments Ltd, registration number , which is authorised and regulated by the Financial Conduct Authority (FRN ). For our full disclaimer please visit

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