PWH Financial Planning Ltd Investment Process

Transcription

1 PWH Financial Planning Ltd Investment Process Summary of Process 1) Establish Risk and Objectives - Objective - Risk - Capacity for Loss 2) Asset Allocation 2.1) - Small Portfolios 2.2) - Bespoke Portfolios 2.3) - Commercial Property in SIPPs 2.4) - Decumulation Phase 3) Contract Selection 3.1) - Structured Products/Deposits 3.2) - VCTs/EISs/Offshore Investments etc 4) Investment Selection 4.1) - Criteria 4.2) - General Asset Allocation 4.3) - Model Portfolios 4.4) - Asset Allocation Review 4.5) - Investment Panel 5) Client Reviews/ Switches - System/Frequency Investment team - Jonathan Wade (Investment Director) - Scott Palmer (Ass. Technical Director)

2 1) Clarification of Objectives and Risk June 2016 The investment process is one small but important part of the overall Adviser process. This document should therefore be read in conjunction with the PWHFP Adviser Process. Establishing clients objectives and attitude to risk is the first stage of any investment process and advice. Clients objectives and investment term are established through the fact-find meeting and recorded in our back office system Finplan. Attitude to investment risk is also discussed at client meetings. A more objective risk profile is obtained through the completion of a risk questionnaire. Having reviewed several alternatives, our chosen system is Skandia s Risk Questionnaire. The questions are relatively easily understood by clients and we have found the resulting risk score to be consistent with our own impression of clients attitude to risk. The Skandia risk questionnaire must be completed by clients in all cases and the results should be consistent with any subsequent investment recommendations. However, it is important that Advisers do not rely blindly on risk questionnaires; it is no substitute for know your client. Risk questionnaires can be confusing to some clients and a conversation with clients about investment risk must always be held. The results from this conversation should be consistent with the results from the risk questionnaire. If they are not, the adviser should establish the reason for the discrepancy and ensure he/she has a thorough understanding of the client s attitude to risk. In summary, Skandia s Risk Questionnaire is a useful scientific and objective way of analysing client attitudes to risk. However, it is only a tool and ultimately, it is advisers responsibility to correctly interpret clients attitude to risk and, as always, ensure suitability of any investments recommended. Risk questionnaires should not be relied upon in isolation. Risk Questionnaires are sent out annually as part of an automated system prior to client reviews. If these Risk Questionnaires are not completed and returned by the client, we should carry out the review and make clear that we have based the review on their existing established attitude to risk. Risk Questionnaires should continue to be sent prior to each review thereafter. 1.1) Capacity for Loss A client s capacity for loss must always be established; this is often more important than attitude to risk. If, for example, a client is highly dependent on his/her capital to provide a sustainable income, or if a capital sum is required in the near to mid-term, this overrides a client s attitude to risk, in that the client cannot afford to have significant risk to capital. It is very important, therefore, that capacity for loss is clarified at each fact find and before making any investment recommendation or investment change for clients. Advisers must judge whether clients genuinely have a capacity for loss and consider

3 whether a client may be better advised to keep money on deposit or repay debts, for example. 2) Asset Allocation Having clarified clients attitude to risk, it is important that any investment selection meets clients objectives and attitude to risk as closely as possible. Sector descriptions such as balanced managed can be misleading as funds falling under this category can have very different asset allocation. PWH Financial Planning have a robust system for unravelling investment funds to ensure the underlying asset allocation of any fund fits with clients needs. Chapter 4 provides details of the criteria through which we ensure that investments are suitable for clients attitude to risk. It is important that Advisers follow the process as prescribed in this document. 2.1) Smaller Portfolios Smaller portfolios, as defined in the client proposition or those with total investments with PWH Financial Planning of less than 50,000, will normally be recommended an investment solution using asset allocator funds which automatically ensure an appropriate asset allocation is maintained for their risk-profile. There is some discretion here and the choice of contract depends on a number of other factors such as the likelihood of further future investment and individual client preferences and serviceagreements. Where funds are held in a Personal Pension Policy, Investment Bond, or a contract which does not offer our preferred asset allocator funds, we will use the closest alternative(s) available. There are a number of asset allocator funds available, which aim to provide an adaptive investment solution where asset allocation is tailored by a third party company to a clients attitude to risk. Having reviewed the market, we have chosen the following risk managed funds: - Prudential Dynamic Portfolios - Standard Life MyFolio - Aviva Multi-Asset These offer a wide range of funds covering all risk-profiles and a strategic, adaptable asset allocation. Specific research can be found in the PWH Financial Planning Research folder. At present, these risk-targeted portfolios do not have sufficient track records to choose one over another. However, they all fundamentally work in the same way to ensure the underlying asset allocation remains appropriate for a client s risk profile whilst allowing regular active changes to asset allocation by the manager to take advantage of macro opportunities.

4 It is also possible to use Royal London Governed Portfolios and Prudential Prufund where applicable although these are specific to the provider s contracts. More specifically the Prufund should only be used when the client s attitude to risk dictate it. Based on the Skandia Risk Profiler, these will ensure that clients have an appropriate asset allocation from a portfolio made up of diversified multi-asset collective investments. Contract and fund charges are competitive with bespoke collectives and these risk-targeted funds have the advantage of always conforming to clients attitude to risk and reducing part of our normal advice and review processes, which is consistent with the D service proposition to which these investments apply. For advisory clients, or those where over 50,000 is invested, asset allocator funds may also be used as our core holdings (see section 6.4), with other sector-specific satellite funds built around to give greater diversification. 2.2) Bespoke Investment Selection For advisory clients with larger portfolios, there is more discretion to recommend individual sector-specific funds although these must always together constitute a portfolio of appropriate diversity and risk for the client. This is our preferred core and satellite investment strategy which involves incorporating multi-asset funds, including asset allocator funds, as core holdings, where they have the flexibility to alter the exposure to certain assets in response to constantly changing market conditions. Single-asset funds are then used as satellite holdings to allow diversity and exposure to more specific areas, and also to allow an element of control on the overall asset allocation. The aim of this approach is that the volatility of your portfolio will be reduced, whilst also attempting to protect the value of investments at times when markets are in decline. The core holdings have the ability to increase or decrease exposure to riskier assets, such as equities, depending on their managers views of future market movements. This bespoke investment selection is always done in conjunction with client risk profiles and our asset allocation review see section ) Commercial Property in SIPPs/SSASs Where a commercial property is held within a SIPP/SSAS, we must consider the asset allocation of the whole pension fund, including the property, when making investment recommendations for the liquid portion of the pension. The property s risk needs to be assessed on a case by case basis as no two properties are the same. Factors such as the property type, location, lease agreement and tenant all have a bearing on the overall risk level applying to a property. In addition, we need to consider aspects such as clients age, likely income requirements, timescales, other sources of income etc when assessing property risk and providing investment advice on other liquid assets within the pension. Where property is bought or held within a pension and investment advice is provided, the investment team must be consulted to ensure that these issues are properly addressed.

5 Each quarter, the PWH Financial Planning investment team meet to consider the prospects for the global economy and investment markets and, in turn, list the relative prospects for individual sectors. These are ranked as short, neutral or long depending on their perceived attractiveness see section 6.3. These rankings are used in selecting satellite funds. All clients apart from those with the most aggressive portfolios (risk level 8 and higher) will have a substantial part (typically 50 to 60%) of their portfolio in our chosen core funds but there is scope for larger portfolios to have a wider range of satellite funds. The panel (see section 6.4.) lists the main satellite funds which we use. There may occasionally be circumstances where a client requires or requests an investment not on our panel for example a sector/market specific investment in which case we can consider these requirements on a case by case basis. Advisers should speak to Jonathan Wade or Scott Palmer in these situations. 2.4) Decumulation Phase Where funds are in decumulation for a sustainable income, or are earmarked for this purpose in the near to medium term, we need to consider risk and, especially, capacity for loss very carefully. Clearly, this relates mainly to pensions but the same can also apply to non-pension capital, depending on clients circumstances and objectives. Scott Palmer conducted a study of the issues currently facing decumulation in April 2016, as income sustainability is a major issue facing thousands of retired individuals in this age of low gilt yields, low investment returns and increasing life expectancy. This study is saved in the Investment Process folder on our server. Following an investment committee meeting to discuss this study, we agreed that the PWHFP Core and Satellite Investment Process is particularly well suited to the decumulation phase as this tends to achieve steady returns and low volatility. Clearly, we always need to consider the full spectrum of income producing contracts, including annuities and there are circumstances where the new hybrid annuities may be appropriate. For clients where income withdrawal is the preferred option, it is particularly important in the run up to the decumulation phase that we look carefully at clients capacity for loss. In many cases, ie where capacity for loss is limited and a sustainable income is clearly required from a fund, this may override a client s attitude to risk. We should not automatically assume that a client s attitude to risk will be the same as in the accumulation (eg pre-retirement) phase.

6 3) Contract Selection It is difficult to be completely prescriptive with regard to contract/policy selection as there are a multitude of different contract and policy types and there are often specific reasons for using various types of contract e.g. pensions, protected investments, trust investments etc which preclude a one size fits all policy. Having reviewed the main wrap platforms, our preferred platforms are currently: A J Bell s InvestCentre, Old Mutual Investment Solutions Aviva Wrap. Our research takes into account the financial strength of the provider, contract charges, investment s initial and annual charges and the features offered by the respective platforms, such as investment phasing, income flexibility, rebalancing, regular withdrawal facilities etc. Please see the Research folder on our server for further details of contract research. These platforms all have their own strengths and weaknesses and it should be noted that no single platform or contract is currently suitable for all clients or situations. The Technical department will ensure that each recommendation will assess the pros and cons of different contracts based on the client s individual circumstances and ensure the most suitable contract is recommended. For most mainstream investment business, we should use the above three platforms. Investment Bonds and some pension business will clearly necessitate other contracts, which are as follows: Pensions Aviva Wrap (as above) Royal London PPP LV Flexible Transition Account Prudential PPP Old Mutual PPP Standard Life PPP Investment Bonds Old Mutual Aviva (Guaranteed + other funds) Prudential (Pru-fund + other funds) LV (WP and G teed) These contracts have been researched in depth and offer a range of options in terms of investment choice, charges and functionality which will allow the right pension or investment contract to be chosen for most clients. Where an adviser believes there is

7 justification for using a platform, contract or policy other than those above, this should be referred to the Technical department so that the appropriate research and due diligence can be carried out prior to any recommendation being made. 3.1) Structured Products/Deposits Due to the constantly changing nature of the structured product/deposit market place it is not possible to publish a preferred panel of providers and products. Instead, the market will be reviewed on a case by case basis to ensure each client receives best advice for the most suitable investment possible. Structured products will only be recommended under limited circumstances, and will be viewed first and foremost as equity investments (assuming an underlying equity index) rather than protected investments. Depending on the product s terms, they can add attractive growth potential to a portfolio as well as an element of risk protection. Structured deposits can be used more widely and can be a valuable way of obtaining higher returns than from cash without excessive risk. However, as with structured products, it is essential that investment term and counterparty risk are considered carefully before recommending a structured deposit. Recommendations for structured products and deposits can be made by our Technical Department only. 3.2) VCTs/EISs/Offshore Investments etc There may be circumstances where it is in our clients best interests to advise on the above. It may be necessary to check our regulatory capacity and P.I. position before committing to these types of investments. Recommendations for VCTs, EISs and Offshore Investments etc should be made by our Technical Department only.

8 4) Investment Selection PWH Financial Planning s investment process dictates that unless a client specifically requests an alternative strategy, we should implement our preferred core and satellite investment strategy. The funds which PWH Financial Planning will utilise in this strategy form an investment panel which is reviewed and updated quarterly by the investment team see section 6.4. Only the investment team can select investments to be recommended to PWH Financial Planning s clients. The panel covers the major geographical investment markets and asset classes. However, there will be occasions where there is a reason to recommend an investment not included on the panel, for example a country specific fund or alternative asset fund. Where this is the case, the proposed investment or enquiry should be made to the investment team, who will research and select an appropriate investment. Where a new client is appointed who has an existing portfolio, we recognise that this portfolio cannot always be immediately restructured in its entirety to fit with our investment process, for reasons of cost and clients preferences. In these cases, the technical team will look to advise the progressive restructuring the portfolio at client reviews until it fits with our core and satellite investment model. 4.1) Criteria for Investment Selection and Research Funds are selected based on the attaining a rating from at least one of the following rating agencies: Square Mile Square Mile are a relatively new ratings agency set up by ex-employees of Morningstar OBSR. Their research is qualitative, looking at the management of a fund and the processes they operate. Their research is focused on the investor outcomes of income, capital accumulation, capital preservation and inflation protection. Morningstar OBSR Morningstar OBSR are one of the most respected external research agencies with one of the largest and most experienced fund research teams in the UK market. They employ a team of analysts who seek to understand fund managers and their funds by focusing on group ownership and stability, resources, investment philosophy, investment objectives, investment process, portfolio construction and risk controls together with regular reviews. Any rating that emerges is based on the analysts convictions in a fund s ability to outperform its peer group and/or relevant benchmark on a risk-adjusted basis over the long term.

9 Rayner Spencer Mills (RSM) This is a Rated Fund Service providing an independent badge of quality to help select funds. This allows funds which have reached the required standard to attain a rating to be identified easily and quickly. Funds are assessed using a rigorous and robust process involving qualitative and quantitative research. Quantitative measures centre on performance and risk with a number of measures used in each area to provide a comprehensive picture. Qualitative assessment gives some idea of how the fund will perform in the future. The purpose of the analysis is to ensure that the fund has robust fund management processes in place, a strong fund management team and also to allow a more detailed view of how the fund actually operates. Funds that are rated are those which are believed to be the best in their sector. They will have different methods of investing and different style and cap biases but all have produced good performance backed up by a defined and understandable process. Citywire Citywire is the only firm to exclusively rate fund managers, not funds. This is because they believe the most important consideration when selecting an actively managed fund is the track record of the manager running the money, providing a different perspective on how to select funds. Fund managers move about frequently and so experienced and talented fund managers may launch new funds which would not necessarily be able to receive ratings from either Morningstar OBSR or Rayner Spencer Mills as they has not been in force for a long enough period of time. If the manager already has a Citywire rating it can provide a good indication that the fund will perform well as the people behind it have the necessary expertise. Behind the Ratings is a sophisticated methodology approved by AKG, an independent actuary. It's entirely numbers-driven and therefore impartial. It is not a 'pay to play' system', so there's no incentive for Citywire to rate one fund over another. Trustnet Alpha Manager(FE) FE Alpha Manager ratings identify the most talented fund managers operating in the UK today. The methodology examines the performance of individual fund managers over the course of their career, focusing on consistency, stock-picking skill and their ability to generate performance in rising and falling markets. This is an important rating as fund managers often change companies and their track record is one of the most important considerations when researching investment funds.

10 In House Research The PWH Financial Planning investment team conduct in-house research. Fund asset allocation is monitored to ensure they remain consistent with clients asset allocation models and risk profiles. Movement of investment managers between companies is monitored carefully as this can have a major bearing on whether funds are included in the panel. The investment team are aware of any changes within the investment market through on-line and postal subscriptions to Citywire and Fund Strategy. In house research includes printing factsheets for all panel funds and reviewing them for the relevant ratings, relative performance, asset allocation and manager changes each quarter. These are also saved for further reference. All these factors are taken into account at the quarterly investment meeting and changes to the fund panel are made at that time. Exceptions can occasionally be made for funds that have not received, or are not eligible, for a rating at the discretion of the investment team, if they believe that the fund can provide value to the appropriate clients. 4.2) General Asset Allocation The table below gives an indication of the overall asset allocations we generally consider to be suitable for clients with risk profiles of between 3 and 8. These are only an indication and due to PWH Financial Planning s core and satellite investment strategy, where the core funds make key asset allocation decisions, there can be fluctuations in clients asset allocation from year to year within a 5% margin either way. Asset Class Risk Level Equities 30% 40% 50% 60% 70% 80% Including UK, US, Europe, Asia, Emerging Markets & Global Specialist Non-Equities 70% 60% 50% 40% 30% 20% Including Cash, Corporate Bonds, Government Bonds, Property & Other Assets

11 Checks are also made with various sources to see whether these splits are still appropriate, and these include: SEI Strategic Portfolios Morningstar OBSR Prudential Dynamic Portfolio Funds Standard Life MyFolio Market Funds Skandia Standard Asset Allocations ISA, CIA, Pension & Bond 4.3) PWH Financial Planning Ltd Model Portfolios June 2016 The following are typical model portfolios suitable for clients with risk-profiles between 3 and 8 i.e. the majority of clients. These portfolios assume we are using a wrap or full platform with a comprehensive investment choice. More restrictive platforms or contracts may necessitate some changes to these portfolios due to unavailability of certain funds. In view of this, model portfolios, have been created for the following contracts: - LV Flexible Transitions Account - Royal London PPP - Standard Life PPP - Aviva PPP - Old Mutual PPP - AEGON PPP (Existing business) It is not possible to create model portfolios for every contract which a client may hold so where certain funds are not available to be purchased, suitable alternatives will be selected by the technical department. In the case of core funds, this will be funds of a similar equity/non-equity split, and for satellite funds this will be funds in the same asset sector. Further details can be found in the PWH investment Process folder on our server. Risk Level 3 Neutral Growth Income CF Ruffer Total Return 20% CF Ruffer Total Return 20% Jupiter Distribution 20% St Life GARS 20% St Life GARS 20% M&G Episode Income 20% Troy Trojan 20% Troy Trojan 20% Inv Perp Distribution 20% Artemis Global Income 10% Rathbone Gbl Opps 10% Artemis Global Income 10% L&G UK Property 10% L&G UK Property 10% L&G UK Property 10% Frank Temp Gbl Ttl Rtn Bd 10% Frank Temp Gbl Ttl Rtn Bd 10% Frank Temp Gbl Ttl Rtn Bd 10% M&G Optimal Income 10% M&G Optimal Income 10% M&G Optimal Income 10%

12 Risk Level 4 Neutral Growth Income CF Ruffer Total Return 20% CF Ruffer Total Return 20% Jupiter Distribution 20% St Life GARS 20% St Life GARS 20% M&G Episode Income 20% Troy Trojan 20% Troy Trojan 20% Inv Perp Distribution 20% Inv Perp High Income 10% AXA Fram UK Select Opps 10% Inv Perp High Income 10% Artemis Global Income 10% Rathbone Gbl Opps 10% Artemis Global Income 10% L&G UK Property 10% L&G UK Property 10% L&G UK Property 10% M&G Optimal Income 10% M&G Optimal Income 10% M&G Optimal Income 10% Risk Level 5 Neutral Growth Income CF Ruffer Total Return 20% CF Ruffer Total Return 20% Newton Real Return 20% M&G Episode Income 20% Newton Real Return 20% M&G Episode Income 20% Troy Trojan 20% Troy Trojan 20% Inv Perp Distribution 20% Inv Perp High Income 10% AXA Fram UK Select Opps 10% Inv Perp High Income 10% Artemis Global Income 10% Rathbone Gbl Opps 10% Artemis Global Income 10% L&G UK Property 10% L&G UK Property 10% L&G UK Property 10% M&G Optimal Income 10% M&G Optimal Income 10% M&G Optimal Income 10% Risk Level 6 Neutral Growth Income CF Ruffer Total Return 20% CF Ruffer Total Return 20% Newton Real Return 20% M&G Episode Income 20% Newton Real Return 20% M&G Episode Income 20% Troy Trojan 20% Troy Trojan 20% Inv Perp Distribution 20% Inv Perp High Income 10% AXA Fram UK Select Opps 10% Inv Perp High Income 10% Artemis Global Income 10% Rathbone Gbl Opps 10% Artemis Global Income 10% FS Gbl Listed Infrastructrure 10% FS Gbl Listed Infrastructrure 10% FS Gbl Listed Infrastructrure 10% M&G Optimal Income 10% M&G Optimal Income 10% M&G Optimal Income 10% Risk Level 7 Neutral Growth Income CF Ruffer Total Return 20% CF Ruffer Total Return 20% Fid Moneybuilder Balanced 20% M&G Episode Income 20% Newton Real Return 20% M&G Episode Income 20% Troy Trojan 20% Troy Trojan 20% Inv Perp Distribution 20% Inv Perp High Income 10% AXA Fram UK Select Opps 10% Inv Perp High Income 10% Artemis Global Income 10% Rathbone Gbl Opps 10% Artemis Global Income 10% Henderson Global Growth 10% Henderson Global Growth 10% M&G Global Dividend 10% Aberdeen Emerging Markets 10% Aberdeen Emerging Markets 10% Newton Asian Income 10%

13 Risk Level 8 Neutral Growth Income CF Ruffer Total Return 20% CF Ruffer Total Return 20% Fid Moneybuilder Balanced 20% Jupiter Merlin Balanced 20% Jupiter Merlin Balanced 20% Newton Real Return 20% Artemis Strategic Assets 20% Artemis Strategic Assets 20% Jupiter Merlin Income 20% Inv Perp High Income 10% AXA Fram UK Select Opps 10% Inv Perp High Income 10% Artemis Global Income 10% Rathbone Gbl Opps 10% Artemis Global Income 10% Henderson Global Growth 10% Henderson Global Growth 10% M&G Global Dividend 10% Aberdeen Emerging Markets 10% Aberdeen Emerging Markets 10% Newton Asian Income 10% 4.4) PWH Financial Planning Ltd Asset Allocation Review June 2016 SHORT NEUTRAL LONG UK Government Bonds US Equities Japan Equities UK Equities European Equities Far East Equities Property Commodities US High Yield Bonds UK Corporate Bonds Gold Emerging Markets Equities

14 4.5 PWH Financial Planning Ltd Investment Panel May 2015 This panel includes all investments approved to be selected for clients portfolios by the technical team, including both core investments and satellite investments. The actual investments selected by the technical department will clearly depend on each client s circumstances, objectives and risk profile, fund size, the investment/pension contract and other factors. The model portfolios in section 4.3 are selected from this panel. Further details of the investment panel, including agency ratings for each holding can be found in the PWH Investment Process folder on our server. Category Core Fund Name Equity Exposure Core - 0% - 35% Managed Threadneedle Defensive Equity & Bond 0% - 35% JPM Cautious Mgd 0% - 35% Jupiter Distribution 0% - 35% Core - 20% - 60% Managed Aviva AIMS 20-60% Fidelity Multi Asset Strategic 30% - 70% Investec Cautious Managed 0% - 60% CF Ruffer Total Return 20% - 60% Threadneedle Equity & Bond 20% - 60% Aviva AIMS Income M&G Episode Income 20% - 50% 20% - 50% (30% av) Invesco Perpetual Distribution Jupiter Merlin Income Portfolio 0% - 60% JPM Multi Asset Income Henderson Cautious Managed 20% - 60% F&C MM Navigation Distribution Std Life Dynamic Distribution 20-60% Core - 40% - 85% Managed >85% (70% Jupiter Merlin Balanced Portfolio av) Fidelity Moneybuilder Balanced 40% - 85% Core - Flexible Investment CF Miton Defensive Multi Asset 0% - 85% Troy Trojan 0% - 100% CF Miton Cautious Multi Asset 0% - 85% WATCH Artemis Strategic Assets 0% - 100% Jupiter Merlin Growth Portfolio Core - Specialist Standard Life GARS Newton Real Return >60% Std Life EDGF >60% RIT Capital Partners IT Ruffer IT Personal Assets Trust IT Prufund Cautious Prufund Growth

15 Satellite UK Bonds M&G Strategic Corporate Bond M&G Optimal Income Invesco Perpetual Corporate Bond Fidelity Strategic Bond Invesco Perpetual Monthly Income Plus Fidelity Moneybuilder Income UK Gilts M&G Gilt & Fixed Interest Income Global Bonds Franklin Templeton Global Total Return Bond Newton International Bond M&G Global Macro Bond Investec Emg Mkt Local Currency Debt Invesco Perpetual Global Bond New Capital Wealthy Nations Bond UK Equities AXA Framlington UK Select Opportunties Standard Life UK Smaller Companies Standard Life UK Equity Unconstrained Schroder UK Opportunities Liontrust Special Situations St Life UK Smaller Companies IT Aberforth Smaller Companies IT Woodford Patient Capital IT JPM UK Dynamic Franklin UK Mid Cap Invesco Perpetual High Income Invesco Perpetual Income Troy Trojan Income Artemis Income Threadneedle UK Equity Income CF Woodford Equity Income Acorn Income IT Standard Life UK Equity Income Unconstrained Global Equities Jupiter Merlin Worldwide Portfolio Rathbone Global Opportunities Standard Life Global Smaller Companies Fundsmith Equity Baillie Gifford International Investec Global Strategic Equity (Free Enterprise) Scottish Mortgage IT Edinburgh Worldwide IT Henderson Global Growth WATCH M&G Global Dividend Newton Global Income Artemis Global Income Schroder Global Equity Income Law Debenture IT European Equities Jupiter European Fidelity European Fidelity European Values IT JPM European Dynamic

16 US Equities GAM North American Growth Threadneedle American Select Schroder US Mid Cap North Atlantic Smaller Companies IT Fidelity American Special Situations Japanese Equities GLG Japan Core Alpha Legg Mason Japan Equity Baillie Gifford Japanese Schroder Tokyo Asian Equities First State Asia Pacific Leaders Aberdeen Asia Pacific Invesco Perpetual Asian Pacific Assets Trust IT Aberdeen New Dawn IT Newton Asian Income Schroder Asian Income Aberdeen Asian Income IT Global Emerging Markets Aberdeen Emerging Markets First State Global Emerging Markets Leaders* * - soft closed First State Greater China Growth First State Indian Subcontinent First State Latin America JPM Emerging Markets Henderson China Opportunities Utilico Emerging Markets IT Property L&G UK Property Trust Ignis UK Property M&G Property Portfolio First State Global Property Securities TR Property IT Aberdeen Property Share Specialist Henderson Global Technology BlackRock Gold & General First State Global Listed Infrastructure 3i Infrastructure AXA Framlington Biotech Worldwide Healthcare Trust AXA Framlington Health ETFS Agriculture ETFS Livestock

17 5) Client Reviews and Switches All client portfolios are reviewed periodically, the time-scale and scope of the review depending on the individual client s agreement/proposition. At the review, it should be established that the portfolio still remains consistent with the client s objectives and attitude to risk. Should the portfolio have become significantly skewed from its original asset allocation, it should be rebalanced at this time. To avoid excessive switching when rebalancing clients portfolios at periodic reviews, we should rebalance client s portfolios only when there is a significant swing in the asset allocation which would take the client into a different risk bracket i.e. a maximum swing of 10% in equity exposure. Where investment or pension contracts offer an automatic asset allocation rebalancing option, this should be selected at outset subject to cost being reasonable. Individual holdings will be checked by the technical department at the time of the review to ensure that no holding has dropped off the investment panel. This may be because the investment team have concerns about an investment fund, there may be a preferable alternative or a fund may have lost the necessary ratings to remain on the panel. Should this be the case, the investment fund will normally be substituted for a fund in the same sector from the investment panel. It is possible that a fund may be removed from the panel so that it cannot be recommended for new investment, but the investment team may decide the fund can continue to be held by existing clients for a limited period pending further review. Any investment switches should be made at the time of the client review. However, in exceptional circumstances there may be an event which requires the immediate bulkswitching of all clients holdings of an investment fund, in which case the investment team will advise advisers accordingly and instigate the switch via admin. Funds will not be switched on the basis of short term performance, i.e. 1 year.