Greystone Wealth Management Investment Committee Journal. M a r k e t S n a p s h o t. Latest Discussion

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1 Greystone Wealth Management Investment Committee Journal For the Investment Committee (IC) meeting held on October 2018 M a r k e t S n a p s h o t UK New Mortgage Approvals decreased from 66,101 in August to 65,269 in September. Source: Bank of England. Japanese Core Inflation Rate y/y 1 increased from 1.2% in August to 1.3% in September. Source: Bank of Japan. US GDP Growth Rate decreased from 4.2% in Q2 to 3.5% in Q3. Source: Bureau of Economic Analysis. Chinese Retail Sales y/y 1 increased from 9% in August to 9.2% in September. Source: National Bureau of Statistics of China. Euro Area Interest Rate was in October, unchanged from September. Source: European Central Bank. Latest Discussion Heading into November, it is the US mid-term elections that are in focus, which marks two years since Donald Trump was elected President. The Republicans will look to maintain their majority in both the House of Representatives and the Senate, with polls suggesting the party is favoured to hold or boost its seat advantage in the Senate. Despite a booming US economy, Trump s approval rating is around the 4 level, which Democrats are hoping will work in their favour. However, just 35 of the 100 seats in the Senate are up for re-election, of which most are held by Democrats, making gaining seats difficult. The US Federal Reserve (Fed) is set for its seventh Federal Open Market Committee (FOMC) meeting of 2018 on Thursday 8 th November, with an eighth meeting scheduled during December. Markets are expecting one more rate hike from the Fed this year, which would take the total to nine rate rises since the process of monetary tightening began in Higher US rates have increased demand for the Dollar, strengthening the currency and improving the flow of capital investment to the US. The US has led the way for global markets so far in 2018, with tax reforms under the Trump administration boosting corporate profits and company valuations have reached all-time highs. Global markets are breathing a sigh of relief as selling pressure has eased somewhat following the recent period of market weakness amid investors worrying over higher interest rates. Rising US Treasury yields have impacted both bond and equity markets globally, with capital values falling simultaneously across both asset classes in recent weeks. Asian and emerging markets remain the worst performers year-todate with the three key factors being; US rates, Dollar strength and higher oil prices. However, fundamentals remain supportive as these economies carry a lower debt-to-gdp (Gross Domestic Product) ratio than developed economies. Earnings season in the US shows corporate profits have risen 24% in the third quarter of 2018 compared to the same period a year earlier, as more than half of S&P 500 firms have reported results. However we are mindful that profits, which have been supercharged by tax cuts, are now coming under pressure and beginning to feel the squeeze of increased tariffs and rising debt costs. Brexit optimism appears to have surged recently with expectations of a deal being reached. Sterling has seen significant oscillations over 2018, rallying on positive sentiment and being punished by any setbacks. Despite this optimism, the Irish border remains a key sticking point for negotiations. advice or verified factual information. All data compiled as at y/y refers to the change from the current value to the value one year ago.

2 VT Greystone Conservative Managed Fund T r a d e s P o s i t i o n i n g 52% GAM Star Credit Opportunities -1% Butler Credit Opportunities +1% 27% Merian Global Equity Abs Return -1% Polar Capital Global Insurance +1% -25% -5% 15% 35% 55% 75% 21% Over/Under weight IA Mixed Investment 0-35% VT Greystone Conservative Managed Fund Cash 1 42% Butler Credit Opportunities GAM Star Credit Opportunities ishares UK Gilts 0-5yr UCITS ETF Rogge-Heitman Global Real Estate Bond Rubrics Global Credit UCITS Sanlam Strategic Bond Vanguard Global Bond Index USD Vanguard Global Bond Index GBP Vanguard Global Short Term Bond Majedie UK Income TB Evenlode Income CFP SDL UK Buffettology Polar Capital UK Absolute Equity Marlborough European Multi-Cap Merian North American Equity Hermes Asia ex Japan Equity 21% Carmignac LS European Equity Hedged Merian Global Equity Abs Return Lazard Global Listed Infrastructure Eq VT Gravis UK Infrastructure Income Aberdeen UK Property Aviva Investors UK Property Legal & General UK Property Standard Life Inv UK Property Threadneedle UK Property Polar Capital Global Insurance 27% Chart 1 Fund Performance since launch 35% 3 25% 2 15% 1 5% Sep/12 Sep/13 Sep/14 Sep/15 Sep/16 Sep/17 Sep/18 IA Mixed Investment 0-35% NR Chart 2 Discrete Annual Performance 1 8% 6% 4% 2% -2% -4% YTD ** Ann* VT Greystone Conservative Managed Fund R Acc All data compiled as at The VT Greystone Conservative Managed fund launched on *Ann refers to annualised performance since launch. **For 2012, discrete annual performance over the period to Source: Thomson Reuters Lipper for Investment Management. including income and net of tax.

3 VT Greystone Cautious Managed Fund T r a d e s P o s i t i o n i n g 3 49% 21% -25% -5% 15% 35% 55% Over/Under weight IA Mixed Investment 20-6 VT Greystone Cautious Managed Fund Cash 1% 29% BlueBay Global Sovereign Opportunities Capital Group Gl High Income Opps Capital Group Gl High Income Opps Hgd GAM Star Credit Opportunities Man GLG Emerging Market Debt TR Rogge Heitman SD Global RE Bond Royal London SD Global High Yield Bond Rubrics Global Credit UCITS Sanlam Strategic Bond Eden Tree Higher Income LF Miton UK Multi-Cap Income Majedie UK Income Man GLG UK Income MI Chelverton UK Equity Income Schroder Income Maximiser TB Evenlode Income Montanaro European Income Prusik Asian Equity Income Artemis US Extended Alpha Artemis Global Income Lazard Global Equity Franchise Sarasin Global Higher Dividend 49% LF Ruffer Total Return Lazard Global Listed Infrastructure Eq VT Gravis UK Infrastructure Income Aberdeen UK Property Aviva Investors UK Property F&C UK Property Legal & General UK Property Standard Life Inv UK Property Threadneedle UK Property 21% Chart 1 Fund Performance since launch 105% 9 75% 6 45% 3 15% Jul/09 Jul/11 Jul/13 Jul/15 Jul/17 IA Mixed Investment 20-6 NR Chart 2 Discrete Annual Performance 14% 12% 1 8% 6% 4% 2% -2% -4% YTD Ann* VT Greystone Cautious Managed Fund R Acc All data compiled as at The VT Greystone Cautious Managed fund launched on *Ann refers to annualised performance since launch. Source: Thomson Reuters Lipper for Investment Management. including income and net of tax.

4 VT Greystone Balanced Managed Fund T r a d e s P o s i t i o n i n g 18% Rogge Heitman SD Global RE Bond -1% Butler Credit Opportunities +1% 19% -15% 15% 3 45% 6 75% 63% Over/Under weight IA Mixed Investment 40-85% VT Greystone Balanced Managed Fund Cash BlueBay Global Sovereign Opportunities Butler Credit Opportunities Capital Group Gl High Income Opps Man GLG Emerging Market Debt TR Rogge Heitman SD Global RE Bond 1% 17% UK LF Miton UK Multi-Cap Income Schroder Income Maximiser TB Evenlode Income CFP SDL UK Buffettology Man GLG UK Income MI Chelverton UK Growth Merian UK Dynamic Equity Polar Capital UK Absolute Equity 32% International Jupiter European Marlborough European Multi-Cap Montanaro European Income Artemis US Extended Alpha Majedie US Equity Old Mutual North American Equity Hermes Asia ex Japan Prusik Asian Equity Income Hermes Global Emerging Markets 31% Carmignac LS European Equity Hedged Merian Global Equity Absolute Return Merian UK Specialist Equity Lazard Global Listed Infrastructure Eq VT Gravis UK Infrastructure Income Polar Capital Global Insurance 19% Chart 1 Fund Performance since launch 115% 10 85% 7 55% 4 25% 1-5% Sep/10Sep/11Sep/12Sep/13Sep/14Sep/15Sep/16Sep/17Sep/18 15% 12% 9% 6% 3% -3% -6% Chart 2 Discrete Annual Performance YTD ** Ann* IA Mixed Investment 40-85% NR VT Greystone Balanced Managed Fund R Acc All data compiled as at The VT Greystone Balanced Managed fund launched on *Ann refers to annualised performance since launch. **For 2010, discrete annual performance over the period to Source: Thomson Reuters Lipper for Investment Management. including income and net of tax.

5 VT Greystone Global Growth Fund T r a d e s P o s i t i o n i n g 1% 5% 94% Over/Under weight IA Global VT Greystone Global Growth Fund Cash Specialist Polar Capital Global Insurance 1% UK CFP SDL UK Buffettology Polar Capital UK Absolute Equity 5% European BlackRock European Dynamic Carmignac Long Short European Jupiter European LF Miton European Opportunities Marlborough European Multi-Cap Montanaro European Income Asia Pacific ex Japan Hermes Asia ex Japan Equity Prusik Asian Equity Income 9% 18% 9% Emerging Markets Hermes Global Emerging Markets North American Artemis US Extended Alpha Baillie Gifford American F&C North American Fidelity American Special Situations Majedie Asset Management US Equity Merian North American Equity Polen Focus US Growth Schroder US Smaller Companies Vanguard US Equity Index Japanese Man GLG Japan Core Alpha Morant Wright Sakura 6% 44% 8% Chart 1 Fund Performance since launch Chart 2 Discrete Annual Performance Dec/05 Dec/07 Dec/09 Dec/11 Dec/13 Dec/15 Dec/17 IA Global NR VT Greystone Global Growth Fund R Acc All data compiled as at The VT Greystone Global Growth fund launched on *Ann refers to annualised performance since launch. Source: Thomson Reuters Lipper for Investment Management. including income and net of tax. 25% 2 15% 1 5% -5% -1 YTD Ann*

6 % Growth % Growth % Growth FX Currency movements vs. GBP (52 weeks) 12% 8% 4% -4% -8% -12% Oct/17 Dec/17 Feb/18 Apr/18 Jun/18 Aug/18 Oct/18 Euro Japanese Yen London Gold Bullion GBP US Dollar UK GBP Trade Weighted Sterling is currently 19% below its 20 year average versus the Dollar. On a long-term basis Sterling appears significantly undervalued, however we expect volatility to persist over the near-term. The currency pair has come under strong selling pressure so far this year (weaker Sterling and stronger Dollar) amid comments from the Federal Open Market Committee (FOMC) indicating a potentially faster rate hike path, which has led to strong Dollar appreciation. Sterling is experiencing significant oscillations versus major currency pairs as we are now less than five months away from the official exit day on 29 th March 2019 when the UK leaves the European Union (EU). Despite Theresa May s Chequers plan being rejected at an EU summit held in Salzburg, optimism appears to have surged recently with expectations of a deal being reached by 21 st November to-date has seen increased volatility across asset classes, with large price swings across global equity and bond markets, as investors worried over rising inflation and Central Bank monetary policy tightening. During the first quarter the FTSE 100 fell c.1 followed by a strong rally of c.15%. June through to August was a fairly quiet period for markets by comparison. Volatility appears to be hitting global markets once again in the fourth quarter. The US Federal Reserve (Fed) looks set to continue on course with its process of quantitative tightening and investors are worrying over rising interest rates. We are mindful of upcoming central bank policy meetings over the remainder of the year and into the next, against a backdrop of political risks and ongoing trade tariff concerns. Fear - Fear Index vs. FTSE World Jan/08 Jan/10 Jan/12 Jan/14 Jan/16 Jan/18 FEAR Index (*LHS) FTSE World TR (*RHS) Inflation Money Market vs. Consumer Price Index (CPI) Oct/08 Oct/10 Oct/12 Oct/14 Oct/16 Oct/18 Over the past 12 months, the Investment Association (IA) Money Market has risen by 0.37% and the UK Consumer Price Index rose by 2.31%. UK GDP figures in April showed the economy grew 0.1% in the first quarter of 2018, the slowest rate since Latest figures show UK GDP grew by 0.6% in the three months to the end of July, compared to 0.4% for the three month period to the end of June. UK Consumer Price Index (CPI) came in at 2.4% in September versus 2.7% in August. The Bank of England has expressed concerns that inflation remains above the 2% target set by the government. IA Money Market UK Consumer Price Index advice or verified factual information. The data shown for the IA sectors refers to the nominal returns including income and net of tax. All performance data is compiled from Thomson Reuters Lipper for Investment Management and Bank of England as at *LHS/RHS refer to left hand and right hand side axis on the charts.

7 % Growth P/E Ratio Price % Growth Yield % Gilt Yield vs. Return Jan/89 Jan/94 Jan/99 Jan/04 Jan/09 Jan/14 Growth (*LHS) Yield (*RHS) The chart shows the historic inverse relationship between bond yields and prices. We have noted in previous Investment Committee Journals that bond yields have gradually trended upwards since the lows achieved in mid-2016 and that continued upward pressure on yields could result in a potential sell-off in the bond market. Recent market conditions have demonstrated this inverse relationship. Investors worrying over rising US interest rates has pushed bond yields up around the globe, negatively impacting prices. European bonds have been particularly susceptible with added concerns over political and economic stability. At the time of writing, 2-year and 10-year UK Gilts yielded 0.81% and 1.51% respectively. Just 12 months earlier, these yields were 0.42% and 1.33% respectively. The chart shows FTSE 100 performance versus company price-to-earnings (P/E) ratios. Following the Brexit vote in the June 2016 referendum, the FTSE 100 index rallied and by the end of 2016 was c.2 higher. In contrast, Sterling fell to a 31-year low. Around 7 of company earnings in the FTSE 100 are non-sterling. Due to Sterling weakness since the Brexit vote, Dollar revenues are worth significantly more. UK equities appear relatively undervalued versus global stocks. The price-to-earnings ratio of UK companies has gradually fallen since the referendum, widening the discount at which UK shares are trading versus the likes of US equities. US technology stocks have surged to all-time highs this year, with Apple and Amazon reaching $1 trillion market-caps. Economic growth in the US has boosted corporate profits and benefitted from tax reforms under the Trump administration. FTSE 100 Price to Earnings (P/E) Ratios Mar/05 Mar/08 Mar/11 Mar/14 Mar/17 +/- 1 St. Dev. P/E Mean (*LHS) P/E Ratios (*LHS) FTSE100 CR (*RHS) Absolute Return / Real Estate / Commodities Oct/08 Oct/10 Oct/12 Oct/14 Oct/16 Oct/18 IA Targeted Absolute Return Lipper Global Commodities Lipper Global Real Estate UK Commodities have been mixed over the last 12 months. The US Dollar has seen increased demand with widening interest rate differentials between the US and other economies (i.e. higher US rates) and the repatriation of assets. We are mindful of the inverse relationship between the Dollar and commodities. Dollar strength is typically negative for emerging markets, which are broadly net exporters of commodities. UK commercial property continues to provide a hedge against equity market volatility, however we remain mindful of the liquidity risks posed. Equity long/short managers can offer solid riskadjusted returns. Volatile market conditions and valuation divergences can create opportunities. including income and net of tax. Data shown for BoE vote and 3 Month LIBOR Rate is sourced from the Bank of England. Data shown for 2Yr/10Yr Gilts is sourced from the Financial Times and is correct to Data for FTSE 100 P/E Ratio is as at from Eden Tree. All performance data is compiled from Thomson Reuters Lipper for Investment Management as at *LHS/RHS refer to left hand and right hand side axis on the charts.

8 Investment Committee Journal Our Approach The VT Greystone Funds are actively managed with access to the universe of funds available in the marketplace. Fund selection and asset allocation is managed by Greystone s Investment Team and overseen by the Investment Committee (IC) having regular communication with consultants in terms of the underlying funds and investment strategy. The VT Greystone Funds provide investors with a variety of investment vehicles with different investment objectives. The Funds are managed by an experienced team of investment advisers from Greystone Wealth Management and Valu-Trac Investment Management. Greystone Wealth Management aims to provide an investment service which achieves our objectives. GWM s philosophy is to utilise all asset classes to reduce risk and volatility. We use a controlled, disciplined investment process to select, monitor and change investment managers at appropriate times to maintain performance. The Investment Advisory Team are ruthless in their pursuit of out-performing assets, whilst the Asset Allocation Committee have an entrepreneurial approach to security selection, whether it be,, Property, or Alternative Investment Strategies, to help deliver your investment ambitions. The IC continues to consider all types of collective investments; Exchange Traded funds, Investment Trusts (but remain concerned about additional volatility due to the premiums and discounts to net asset values) and Mutual Funds. Passive products and the efficiency of replicating indices is an area of continued research. Notes The pre-rdr share classes of the Greystone funds will be transferred to the R share classes in due course. The purpose of this is to improve transparency of the fund charges and reduce the cost to investors. An application has been sent to the FCA to begin this procedure and a notification of changes will be delivered to investors in due course. IMPORTANT INFORMATION This document is for advisers and retail clients. It does not constitute a form of financial advice and should not be relied upon. This is provided for information only. At Greystone we seek to guide you with your investment strategies by assessing and continually checking the levels of investment risk you are willing and able to take, thus ensuring suitable investments are made on your behalf. Past, simulated past or future projected performance is not a reliable indicator of future performance and may not be repeated. Investment markets and conditions can change rapidly and as such any views expressed herein should not be relied upon when making investment decisions. Neither the payment of dividends or return of capital is implied or guaranteed. There is a risk of loss of capital. Rates of exchange may cause the value of investments to go up or down. The information and any opinions expressed herein may change at any time and therefore this document does not constitute investment, tax, legal or other advice or recommendation or an offer to sell or an invitation to apply for any product or service. Investors should consider carefully whether an investment in this fund or portfolio is suitable in light of circumstances and resources. Greystone Wealth Management is a trading name of Foundation Investment Management Limited who are authorised and regulated by the Financial Conduct Authority. Financial Services Register Number