INVESTMENT BULLETIN. January - March

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1 January - March 2018 INVESTMENT BULLETIN The Rules to Dividend Taxation Your ISA Check List Additional Permitted Subscription (APS): Are you in the know? Utilising your Investment Options using a Bed and ISA Is your Cash ISA Not Delivering? TQ Invest is a trading name of Capital Professional Limited, which is Authorised and Regulated by the Financial Conduct Authority (FCA). FCA Number Registered in England No Registered Office: 6th Floor, Reading Bridge House, George Street, Reading RG1 8LS. Investing for

2 Hello and, above all, welcome to the first TQ Invest bulletin of Already we find ourselves continuing at pace towards the end of the first quarter of the year, but I d like to take this opportunity to wish you all the best for the coming months. The market has fallen in the last few weeks after a period of prolonged market stability. This correction has led to the FTSE 100 being down 500 points since the beginning of the year. These periods of volatility are to be expected, but the question remains open as to whether this could be the beginning of a more volatile market environment in the future and what external influences could have an effect on the political and economical backdrop. As you ve probably noticed we ve made a few small changes to our bulletin to make it even better for you, however you will still find the same great features inside including the Hero Highlight pages, TQI portfolios and a range of articles that you should find of interest at this time of year. Before we get started, I want to highlight to you a critical point in the financial calendar that is fast approaching and requires your attention - the end of tax year. The current ISA allowance for 2017/18 is 20,000 and the deadline is 5 April There s not long to go, but it s still not too late to make the most of your tax-free allowance. If you d like to top-up your ISA, you can do so directly via one of our TQ Representatives. Simply contact us on On the subject of allowances, we provide an insight into utilising your ISA allowances and an Additional Permitted Subscription (APS). In our article we discuss the rules and time limits of the options available, please turn to page 6 for more detail. Meanwhile with the 5 April just around the corner and the big tax advantages that an ISA wrapper can offer investors, how many items on your ISA check list have you crossed off? If you re unsure about the next step in your own ISA journey, our very own ISA checklist found on page 5 explores the various options and actions you could take to ensure you utilise the maximum allowance available to suit your individual circumstances. In fact, there a few options you could consider a Bed and ISA for example involves selling shares or funds you hold outside an ISA wrapper and reinvesting the proceeds with your ISA. Or what if your Cash ISA isn t providing the return you d hoped it would. Although it carries more risk an Equity ISA could be alternative option for some investors. Our articles enclosed covers this and more in detail. I hope you enjoy the contents of this bulletin and as always, get in touch with us if you have any questions. Yours Sincerely Nigel Stockton CEO Contact By Phone Online By Post By Simply call us on and we ll take your investment over the phone. Please have a debit card ready, with sufficient funds in the account. Visit where you can view and buy funds. Including those mentioned in this bulletin. Other funds are available to purchase online. Applications can be sent in the post to you for any funds covered here or on our website. Simply call us on and we will happily arrange for all forms to be posted to you. If you would like further information or application forms for any funds covered in here or on our website, you can us at info@tqinvest.co.uk 2

3 Market Overview This quarter s Market Overview has been brought to you Brooks Macdonald. The fourth quarter capped a surprisingly positive year for risk assets, given expectations at the start of Growth remained encouraging and was synchronised across the major regions. Meanwhile, persistently low inflation allowed monetary policy to stay accommodative, despite a few of the world s major central banks beginning to remove some of the unprecedented support they have provided since the global financial crisis a decade ago. This ensured that asset-market volatility remained near record-low levels, as it has been throughout the year. Summary The pan-asian region was the bright spot in the 4th quarter Japanese equities led the market, supported by Shinzō Abe s re-election as Prime Minister and further improvement in the economy. Encouragingly, Japan s strong performance occurred without a significant weakening of the yen, indicating that investors are focusing on the economy s improving fundamentals. The emerging markets also did well, with Xi Jinping consolidating his power as China s President and the economy performing strongly, despite the persistence of some well-known structural headwinds. More broadly, the emerging markets benefitted from stronger industrial commodity and oil prices, accommodative financial conditions & a cheaper dollar. The potential for tax cuts boosted US equities, while political developments and the strength of the euro weighed on European equities The US market outperformed broader global equities, with the Trump administration succeeding in reforming the US tax code at the end of December. The economy also strengthened further, allowing the Federal Reserve (Fed) to raise interest rates; it also began reducing the size of its balance sheet. Conversely, European equities underperformed, despite the region s economic improvement. Although Angela Merkel struggled to form a coalition government, the main headwind was the strength of the euro, which appreciated after the European Central Bank (ECB) decided to further reduce the value of its monthly asset purchases. The UK faces weaker economic growth, but this could be offset by improvements in the political backdrop Risk assets again made strong gains in the final quarter of the year In the UK, the economy performed relatively well and this led the Bank of England (BoE) to reverse the emergency interest rate cut it implemented following the Brexit referendum in We do not expect this to mark the imminent start of cycle, with both the government and BoE reducing their forecasts for economic growth amid downward revisions to their productivity growth forecasts and with negative real wage inflation weighing on consumption. Meanwhile, the political backdrop improved with the Chancellor pledging to increase fiscal spending to support the economy and progress appearing to be made in the Brexit negotiations. Against this backdrop, sterling reversed some of its post-referendum devaluation and UK equities achieved solid gains, albeit marginally underperforming their developed world peers. With the environment positive for risk assets, fixed income generally underperformed equities Within fixed income, UK gilts were among the strongest performers as concerns over the UK economy outweighed the BoE s decision to increase interest rates. More broadly, sovereigns outperformed corporates. High yield bonds lost the most ground, as investors reassessed the premium they require to hold more risky assets in light of the Fed and ECB s decisions regarding its asset purchase programmes. Nevertheless, corporate bond spreads remain near alltime lows, with the current goldilocks corporate operating environment expected to remain in place in the near term. The United Kingdom It was an eventful quarter for the UK. In terms of the economy, the labour market has remained strong but the unemployment rate has now stabilised near cyclical-low levels, suggesting that further employment gains may be more limited. Wage growth is edging higher, but it continues to be outpaced by inflation and negative real wage growth is increasingly weighing on consumption. Despite this, there are some areas of encouragement, with business sentiment surveys indicating expanding activity, particularly in the manufacturing and industrial sectors of the economy. The UK government s economic growth projections Figure 3: The UK government has reduced its expectations for economic growth, largely because of a downward revision to its forecasts for productivity growth (no forecast provided for 2022 in March). Source: Office for Budget Responsibility Rate (%) GDP growth (March) GDP growth (November) 3

4 Market Overview but it is expected to slow as the effects of Brexit weigh on growth in the coming years Overall, the economy has grown more quickly than expected in recent quarters and this led the BoE to raise its base interest rate for the first time in over a decade in November. However, this move simply reversed the emergency cut it made in anticipation of growth slumping following the Brexit referendum. The BoE Monetary Policy Committee s (MPC) accompanying communication suggested that its policy stance will remain highly accommodative for some time. We note that both the BoE and UK Government reduced their economic growth projections during the quarter, with productivity gains now anticipated to be lower and negative real wage growth expected to weigh further on consumption in The government has responded by announcing plans to increase spending While the UK government remains under pressure, having lost its majority during last year s general election, the Chancellor sought to regain some favour during his budget statement. He was able to announce plans to increase government spending, while also maintaining his commitment to financial discipline, given that the government s fiscal deficit has already been reduced significantly in recent years. Market movements subsequent to his announcement indicated that UK political risk had declined as investors took his plans well. but the greatest boost it can provide is still a market-pleasing result in its EU secession process Meanwhile, the Brexit negotiations between the government and EU are progressing, raising hopes that the secession will occur in a smooth and orderly fashion. However, the process remains in its early phases and many issues still need to be resolved. These include the establishment of new trade agreements and determining the forms of the post-brexit legislative and regulatory backdrops. It is likely that compromises will have to be made by both sides and with many senior members of the government split over what they want the UK s relationship with the EU to look like, the process still holds the potential to catalyse periods of heightened uncertainty. Nevertheless, the progress made during the quarter helped sterling and UK equities make gains, albeit the latter marginally underperformed their global peers. Outlook Our core market view is that the current low inflation, low growth economic environment will continue through the start of During 2017, we saw a co-ordinated acceleration in global growth which has filtered through into strong corporate earnings, particularly in Europe. At the same time inflationary pressures have been kept subdued by a lack of wage growth and technological improvements streamlining many industries. This has so far allowed the world s major central banks to keep monetary policy accommodative. As such, equities remain the most attractive asset class. Supporting this is the large differential between the earnings yield on global equities (c. 6%) and US ten-year treasuries (c. 2.4%), which we believe will continue to support index valuations, particularly given the positive earnings momentum of recent quarters. We have identified two major risks to this core view; higher-than-expected inflation and a slowdown in global growth If inflationary pressures picks up in the developed world then central banks accommodative monetary policies could be called into question. Should interest rate expectations increase meaningfully, particularly in relation to longer-term rates, this could catalyse a sell-off in sovereign bond markets. There are assets that can be used to mitigate the risk of rising inflation One asset class that would benefit from a so-called yield curve steepening is financial equities, specifically banks. Traditional banks make a profit from the difference between longer-term rates, which they lend at, and the shorter-term rates at which they are able to borrow. Should this differential widen, the earnings of retail banks could increase meaningfully. Investment banks are also potential beneficiaries of the financial deregulation that has been suggested by the Trump administration. Likewise, high-quality bonds should offer protection against slowing growth The second major risk to our core view is a deceleration in global growth, which could catalyse a broad sell-off in risk assets. As a result of this risk, we hold investment-grade bonds and a variety of other non-equity asset classes within our portfolios. These include alternatives such as structured notes, convertible bonds and multi-strategy hedge funds, all of which aim to deliver returns that have low correlations to traditional equity markets. The construction of client investment portfolios reflects our outlook Overall, we remain constructive on risk assets through the start of However, have sought to maintain balance within our clients portfolios, so that they can perform well against a variety of market backdrops. With equity market valuations above their historical averages in some areas, we believe sectoral and geographical asset allocation decisions will be key components of returns over the coming year. For example, if inflation fails to accelerate, we would expect sectors that can deliver secular above-trend growth, such as technology and healthcare, to outperform. Within the non equity asset classes, deep and detailed research remains essential in adequately analysing sectors which can be complex, but ultimately hold the potential to offer attractive risk-adjusted returns. 4

5 The Rules to Dividend Taxation The tax-free Dividend Allowance is changing in April An annual 5,000 tax-free personal dividend allowance was introduced by the Chancellor George Osborne in April 2016, replacing the notional 10% tax credit which investors previously paid on dividends. The allowance, which is available to anyone who has dividend income, enables an investor to receive 5,000 dividend income a year with no tax to pay. In the 2018/2019 tax year however, this tax-free Dividend Allowance is being reduced from 5,000 to 2,000. This means that where investments are held outside of a tax wrapper such as an ISA, you might pay tax of 7.5% for basic rate payers, 32.5% for higher rate payers and 38.1% for additional rate payers, on dividend income which exceeds the allowance of 2,000. The amount by which your investment income will be affected by this reduction in dividend allowance depends on which tax band your dividends falls into. Your ISA Checklist For an investor who is currently receiving 5,000 dividend tax-free, a basic rate payer could be as much as 225 worse off, 975 for a higher rate payer or 1,143 for additional rate payers (based on paying dividend tax of 7.5%, 32.5% or 38.1% on 3,000). The rate of tax you will pay over the annual 2,000 allowance will be determined by your other taxable income, as the tax-free dividend income counts as part of your total taxable income. It therefore means that the tax-free element can push other forms of income into higher rate tax. Dividend allowance 2018/ /18 Dividend allowance at 0% tax - all individuals 2,000 5,000 Tax rate on dividend income: Basic rate taxpayers Higher rate taxpayers Additional rate taxpayers 7.5% 32.5% 38.1% 7.5% 32.5% 38.1% Reminder - Within an ISA wrapper, dividends are tax-free so it s important to remember to consider your ISA allowance when making an investment. Have you invested in an ISA since 6 April 2017? YES Have you invested the full 20,000 ISA allowance? NO NOT SURE NO YES NOT SURE Give TQ Invest a call on Give TQ Invest a call to check YES Did you invest earlier in the Tax Year through TQ Invest Just a reminder the allowance for the 2018/2019 Tax Year from 6 April 2018 is 20,000 Give TQ Invest a call on Give TQ Invest a call to check When you call TQ to invest Call TQ Invest for an ISA Application form NO Are you investing through an Investment Platform (e.g. Fidelity Fundsnetwork/Cofunds)? NOT SURE Give TQ Invest a call to check YES Call TQ Invest to have them ed or posted NO Have you seen the latest Key Investor Information Document (KIID) for your funds NOT SURE Give TQ Invest a call to check YES Give TQ Invest a call who can organise investing by cheque NO Are you happy to pay by debit card? YES Give TQ Invest a call on ISA Reminder Have you topped up your ISA yet? You have until the 5 April 2018 to utilise this year s allowance. 5

6 Additional Permitted Subscription (APS): Are you in the know? Until April 2015, on the death of an ISA account holder all the tax benefits of the account were lost forever. From April 2015 it has been possible for the equivalent of the ISA balance to be passed onto a surviving spouse or civil partner, and for the tax benefits to be reinstated. Currently, from the date of death of the first spouse or civil partner, their ISA accounts lose their tax-free status. This means that during the period of administration any income received into the account or gains realised will be subject to the income tax and capital gains tax regimes and this may mean that the Personal Representatives need to file tax returns for the estate period of administration. Additional Permitted Subscription The surviving spouse or civil partner does not inherit the actual ISA. Rather the tax-free status of the ISA account can effectively be regained as the surviving partner is given an Additional Permitted Subscription (APS) allowance. This is effectively a one-off ISA allowance that s equal to the value of the ISA at the date of the holder s death. It won t be counted against the normal ISA subscription limit for the survivor but will instead be added on to their annual ISA limit. If the deceased partner had multiple ISAs with different providers, the surviving partner receives an APS allowance for each one. The rules apply irrespective of the size of the deceased s ISA pots. The APS is flexible, it permits subscription to Cash or Stocks and Shares ISAs the surviving spouse holds, or, to new Cash or Stocks and Shares ISAs opened for the purpose. The value of the deceased s ISA accounts forms part of their estate for inheritance tax and would be distributed according to the provisions of their Will or the rules of intestacy. The APS is available to the surviving spouse regardless of whether they inherit the ISA account itself. At present the APS allowance is equal to the value of the deceased s ISAs at the date of death and does not change. So if the balance of the account increases or decreases after death the APS will be the value of the account at the date of death. This can cause some administrative difficulties when transferring the ISA assets if the Stocks and Shares held have grown in value. The allowance needs to be claimed and there are time limits for dealing with this. In specie transfers This must be of the actual non-cash investments held, and therefore the surviving spouse would need to inherit these assets directly. The transfer then needs to be made within 180 days of beneficial ownership passing to the surviving spouse and to the same ISA manager. Cash subscriptions The time limit is within 3 years of the date of death, or if later, 180 days of the completion of the administration of the estate. Under the current rules there are two potential issues: 1. During the administration of the estate, the ISA has lost its tax-free protection. 2. The assets may be growing and this means that the surviving spouse may not be able to rewrap all of those assets in an ISA once the administration of the estate is complete. From 6 April 2018, new rules are coming into force which mean that when an investor that holds an ISA account dies, their ISA becomes a continuing account of a deceased investor or a continuing ISA for short. No money can be paid into it from this point, but it will continue to benefit from the tax advantages of an ISA, so growth will remain tax-free. Its status as a continuing ISA lasts until either the administration of the estate is complete, the ISA is closed, or three years have passed since death whichever comes first. From 6 April 2018, the APS will normally be the value of the cash or investments passed on, or the value of the ISA on the date of death whichever is higher. This new legislation also affects the APS ISA allowance that can be passed to the spouse. At the moment, the allowance transferred to the surviving spouse is equal to the value of the ISA on the date of death. ISA Reminder Have you topped up your ISA yet? You have until the 5 April 2018 to utilise this year s allowance. 6

7 Utilising your Investment Options using a Bed and ISA If you have not used your full ISA allowance this tax year and you hold investment funds outside an ISA wrapper, you may wish to consider using the Bed and ISA option. Personal Finance Portal Online Access to your Portfolio and much more! Bed and ISA involves selling shares or funds you hold outside an ISA wrapper and reinvesting the proceeds within your ISA. You may reinvest the proceeds in the same fund or you can use the opportunity to choose an alternative fund. Selling funds to transact a Bed and ISA could result in a capital gain or loss. This may help some investors who are looking to offset potential capital gains tax liabilities when they dispose of their investments. The capital tax gains allowance for 2017/18 is 11,300. Any future gains made within your ISA are free from tax. When undertaking a Bed and ISA transaction, you will not end up with the same number of units due to market movement on the fund price and/or the bid-offer spread on the sale and purchase price of a fund. You may be out of the market for a short time. Please contact a member of the TQ Invest team if you have any questions or would like some more information on Bed and ISA. Is your Cash ISA Not Delivering? Although the Bank of England raised interest rates for the first time in over a decade to 0.5% in November last year, and have signalled their intention to raise rates again in an effort to control inflation, the returns generated by Cash ISAs will remain low for some time to come. Over the past few years, an increasing number of clients have chosen to transfer their Cash ISAs to an Equity ISA as the interest received on cash accounts continues to disappoint. An Equity ISA has the potential to achieve far higher returns than money held in Cash and this, along with the wide choice of investments available, is proving popular with investors. Some investment funds are currently achieving a yield over 4%, indeed our own TQ Invest Portfolio has a historic yield of just over 4%. However it is important to remember that none of these equity funds offer a guaranteed income yield; the yield is subject to change, and whilst your money is secure with cash, the value of equities can go down as well as up and you may get back less than you invested. If you are considering an Equity ISA, you must be willing to accept this higher level of risk. You can transfer a Cash ISA to an Equity ISA without it affecting your ISA allowance for this year. Transferring your Cash ISA is a simple process. There is no need to contact your current ISA provider, just call the TQ Invest team on and we will guide you through the process and answer any questions you may have. TQ Invest s Personal Finance Portal (PFP) gives you access to view all your finances in one place 24/7 on any mobile or web device. PFP enables you to view your fund information and financial portfolio at the click of a button. So whether you re looking for an up-to-date valuation of your portfolio, want to assess how you re progressing against your goals or simply wish to get in touch, PFP has it covered. Here are some of the things you can do: Portfolio Valuations You can see an overview of your net worth which illustrates the size of your assets and liabilities. You can view a full breakdown by category. Set Savings Goals Create goals to help manage and stay on top of your finances. Don t know where to start? How about; Creating a Rainy Day Fund, Increase Pension Savings or Saving for Holiday? Interactive Charting Plot your portfolio valuation over any period of time in a variety of interactive charts. View the valuation of the individual funds you hold, access the latest fund factsheet and share price. Financial X-Ray tools Financial X-Ray is a tool to analyse the funds that you are invested in across your portfolio. You can analyse the funds you hold, plot their performance against each other over a time period, look at the top ten stocks in your portfolio. Two-way secure messaging You can compose a new message to TQ Invest and read our response in the secure message page. 7

8 Hero Funds The Hero Fund List, which is available in full on our website, is a selection of funds across many different sectors and geographical areas for you to consider when selecting your next investment. These funds are not personal recommendations. The UK continues to be a popular hunting ground for many investors. The end of 2017 saw a strong finish for UK equities but since the start of the year some volatility has crept into the market. The FTSE 100 share index began 2018 above 7,700 points but now stands below 7,200. Sterling has been increasing in strength versus the US dollar and this is weighing on some FTSE 100 companies whose earnings come from overseas. Speculation over potential interest rate rises in both the US and UK is also concerning markets. As with the UK, Global markets including Europe and Asia, made a positive start to 2018 but a correction in February again saw markets retreating from these highs. Below are a selection of funds from our Hero List for the full list, please go to tqinvest.co.uk UK Equities Marlborough Special Situations The objective of the scheme is to provide investors with capital growth by following a speculative policy investing in smaller companies, new issues and companies going through a difficult period with good recovery prospects. Marlborough Special Situations Yield 0.94% OCF 0.80% No. of Holdings 199 1,547.5 million Franklin UK Mid Cap Aims to achieve capital growth exceeding that of the FTSE 250 Index (excluding investment company stocks) over the medium to long term (meaning 3-5 years). Franklin UK Mid Cap Yield 2.22% OCF 0.82% No. of Holdings 36 Kames Ethical Equity 1,023 million The investment objective is to maximise total return (income plus capital) by investment in equities and equity type securities in companies based in the UK, principally conducting business in the UK or listed in the UK stock market which meets the funds predefined ethical criteria. Kames Ethical Equity Yield 2.05% OCF 0.78% No. of Holdings million BlackRock UK Special Situations The Fund aims to achieve long-term capital growth on your investment. The Fund invests primarily in the shares of companies incorporated or listed in the United Kingdom and will normally have an emphasis on small and medium sized companies which are those companies whose market capitalisation is lower than that of the companies in the FTSE 100 Index. The market capitalisation of a company is the share price of the company multiplied by the number of shares issued. The Fund has the flexibility to invest outside of the asset class set out above. BlackRock UK Special Situations Yield 1.90% Liontrust Special Situations The Fund can invest in any stocks in the FTSE All-Share Index regardless of their size or sector, enabling the managers to find the best opportunities wherever they are across the UK stock market. Anthony Cross and Julian Fosh use the Economic Advantage process to identify companies with a durable competitive advantage that allows the companies to defy industry competition and sustain a higher than average level of profitability for longer than expected. Liontrust Special Situations Yield 1.84% OCF 0.87% OCF 0.84% 3,217.5 million million No. of Holdings 49 No. of Holdings 68 With our online fund research tools, you can research and compare all of the funds available on our Hero Fund List, using a wide range of criteria, such as performance, yield, sector and charges. It s important to remember that choosing to invest in our Hero Funds does not constitute financial advice and is not a personal recommendation to you to invest. You should be sure of the fund s suitability to you before investing. 8

9 JOHCM UK Equity This fund aims to generate long-term capital and income growth through active management of a portfolio of UK equities. JOHCM UK Equity Yield 4. OCF 0.67% No. of Holdings 62 Artemis 3,500 million The fund aims to produce a rising income with capital growth from a portfolio primarily made up of investments in the UK including ordinary shares, convertibles and fixed interest securities. Artemis Yield 3.71% OCF 0.79% No. of Holdings 55 Schroder Maximiser 6,145.9 million The fund aims to provide income and capital growth. The fund aims to deliver a target income of 7% per year but this is not guaranteed. The fund generates its income from two sources; dividends received from shares in companies; and cash received from selling some potential future growth of the fund s holdings using derivatives Schroder Maximiser Yield 6.97% OCF 0.91% No. of Holdings 36 Unicorn UK 1,156.5 million The Fund aims to provide an income that is at least 10% higher than that produced by the FTSE All-Share Index. The strategy is to run a concentrated portfolio of up to 50 stocks with a small to mid cap bias. Global Equities Neptune Global Equity The Neptune Global Equity Fund takes a truly global view of stock selection, investing in our favoured opportunities regardless of where they are based. Neptune Global Equity Yield 1. OCF 0.90% No. of Holdings 52 Newton Global 206 million To achieve increasing annual distributions together with longterm capital growth from investing predominantly in global securities. Newton Global Yield 3.25% OCF 0.79% No. of Holdings 50 Asia Pacific Equities 5, million Stewart Investors Asia Pacific Leaders The Fund invests in shares of companies based in or having significant operations in the Asia Pacific region including Australia and New Zealand excluding Japan. The Fund invests in shares of large and mid-sized companies in the region Stewart Investors Asia Pacific Leaders Yield 1% OCF 0.89% No. of Holdings 43 Schroder Asian Alpha Plus 8,243.1 million The Fund aims to provide capital growth by investing in equity and equity related securities of Asian companies, excluding Japan. Unicorn UK Yield 3.85% OCF 0.81% Schroder Asian Alpha Plus Yield 0.83% OCF 0.95% 688 million million No. of Holdings 46 No. of Holdings 64 The TQ Invest Hero Fund List can be found online at For further information on the funds highlighted above or on any funds on the Hero List please telephone one of our Investment Team Representatives on

10 TQ Invest Portfolios At TQ Invest we have created four portfolios which might help. Each portfolio has six funds and is designed to fit a general risk outlook of an investor, such as cautious or growth. Please remember that the TQ Invest Portfolios are not personal recommendations to you, and you should be sure of their suitability to you before investing and be willing to invest for the medium to long term. If you have any doubt, please call and we can refer you to a financial advisor. If you are happy to make your own investment decisions all you have to do is to look carefully at the portfolios and the funds within and decide if they are right for you. It is important to remember that the value of investments, even the lower risk ones, and the income from them, can go down as well as up and you may not get back the amount you invested. Please read the Key Investor Information Document for each fund and our full Important Investment Risk Information. Cautious Portfolio The portfolio objective is moderate and steady total returns. It holds a balanced mix of higher risk growth assets such as equities and property, and lower risk assets such as fixed income. Although it takes a defensive approach, investors in this portfolio must be willing to accept some short term fluctuations in the value of their investments. Portfolio Summary Name 1yr 3yrs 5yrs Portfolio TQ Invest Cautious Portfolio Benchmark IA Mixed Investment 20-60% Shares Fund Manager Invesco Perpetual Threadneedle Global Equity Threadneedle Global Equity Invesco Perpetual Legal & General Dynamic Bond Invesco Perpetual Monthly Plus Henderson Strategic Bond Henderson UK Property Janus Henderson Strategic Bond Janus Henderson UK Property PAIF Invesco Perpetual Monthly Plus Legal & General Dynamic Bond Trust Data as at 26 February 2018, FE Analytics Balanced Portfolio The portfolio objective is long term capital growth. It has a greater exposure to higher risk growth assets such as equities and property than the Cautious Portfolio. It also holds some defensive assets such as fixed income. Investors in this portfolio must be willing to accept some short term fluctuations in the value of their investments. Portfolio Summary Name 1yr 3yrs 5yrs Portfolio TQ Invest Balanced Portfolio Benchmark IA Mixed Investment 40-85% Shares Fund Manager Janus Henderson Strategic Bond Invesco Perpetual % Artemis Henderson Strategic Bond Threadneedle Global Equity Invesco Perpetual Henderson UK Property Liontrust Special Situations 10% Threadneedle Global Equity Artemis Liontrust Special Situations Janus Henderson UK Property PAIF Data as at 26 February 2018, FE Analytics 10

11 Cautious Portfolio Balanced Portfolio Growth Portfolio Portfolio Portfolio Summary Name 1yr 3yrs 5yrs Portfolio TQ Invest Growth Portfolio Benchmark IA Flexible Investment - Dec Fund Manager Liontrust Special Situations Growth Portfolio The portfolio objective is capital growth. It will mainly be invested in higher risk growth assets such as equities. The focus of this portfolio on equities provides the potential for higher returns and is designed for investors who intend to invest for the long term and are comfortable with taking high level of risks. Investors must be willing to accept substantial fluctuations in the value of their investments. Threadneedle Global Equity Invesco Perpetual Jupiter European Newton Asian Unicorn UK Newton Asian Liontrust Special Situations Unicorn UK Jupiter European Invesco Perpetual Threadneedle Global Equity Data as at 26 February 2018, FE Analytics Portfolio Summary Name 1yr 3yrs 5yrs Portfolio TQ Invest Portfolio Benchmark TCWM Portfolio Benchmark - Dec Fund Manager Fidelity Enhanced Portfolio The portfolio objective is to provide an income from a mix of different asset classes. It invests in a combination of income generating higher risk assets such as equities and property and defensive assets such as fixed income. A higher allocation to equities will provide the potential for some moderate long term capital growth. Investors in this portfolio must be willing to accept some short term fluctuations in the value of their investments. Invesco Perpetual Monthly Plus Janus Henderson Strategic Bond Janus Henderson UK Property PAIF Invesco Perpetual Threadneedle Global Equity Threadneedle Global Equity Fidelity Enhanced Invesco Perpetual Henderson Strategic Bond Henderson UK Property Invesco Perpetual Monthly Plus Data as at 26 February 2018, FE Analytics 11

12 TQ Invest s sister company Ascot Lloyd offers regulated financial advice both on a face-to-face and telephone basis. If there are any areas of investment decision you are not comfortable making then please contact a member of our TQ Invest telephone team who will be happy to make arrangements for you to speak with a Financial Adviser. Any advice taken will not compromise your TQ investment which is held separately on an execution only basis. If you haven t already, register to the Personal Finance Portal (PFP). Please contact one of our Investment Team Representatives, who will be able to assist you to view your valuations quickly and easily. Contact us on for further assistance. Should you wish to learn more about Ascot Lloyd, please visit Refer a friend... Back in 2012 we launched our referral scheme, exclusively for friends and family of our clients. The scheme has proved incredibly successful over the years and the feedback we have received from our clients has been extremely positive. For every new customer you refer to us who goes on to buy, or transfer investments to TQ Invest, we will send you a 50 Marks & Spencer voucher as a token of our appreciation. Referring a friend is an easy process. If you know someone you feel would benefit from the investment expertise at TQ Invest, simply ask them to contact a member of our team at providing your name as reference. Upon successful referral your voucher will be sent to you. Important Notes. If you no longer wish to receive our bulletin, please contact a member of the TQ Invest Team. Investments should be regarded as long-term and are not suitable for money which may be needed in the short term, you should always have a sufficient cash reserve. As we don t know your individual circumstances, none of the information in this bulletin is specific to you; therefore CPL Ltd can take no responsibility for the decisions you make from it. You must obtain full details of the products and look at your own circumstances, objectives and attitudes to risk before proceeding. If you need advice, please call Past performance is not a reliable indication of future returns, the value of units and the income from them, can fall as well as rise and you may get back less than your original investment. The investments featured in the website do not provide guarantees and you could lose all your money. from investments may fluctuate and part of the capital may be used to pay that income. Non-investment grade bonds are contained in some funds which carry a risk that the capital value of the fund will be affected because they have an increased risk of default on repayment by the issuing companies compared to investment grade bonds. Exchange rate fluctuations may have an adverse effect on the value of non-uk shares. Levels and basis of, and reliefs from taxation can change. Tax reliefs referred to are those currently available and their relevance depends on the individual circumstances of the investor and their tax position. As with all investments, the tax treatment of Pensions and ISAs is subject to change by HM Revenue and Customs. Before transferring or liquidating an investment you should ascertain whether any exit penalties or initial charges will apply and consider whether it will be beneficial to you over the period of the investment to proceed. If investments are liquidated you may suffer a loss of income or growth, should the market rise, while the transfer remains pending. The model portfolios are not personal recommendations - that is, they might not necessarily be suitable for you and your personal circumstances. Instead, we have designed these so as to provide good prospects of returns for investors looking to commit monies to mediumto-longer term investments. They cater for a range of risk profiles though importantly, even the cautious portfolio can fall in value in the short term. If you are in any doubt as to the suitability of the model portfolio, you should seek the advice of a Financial Adviser. The FCA does not regulate some forms of tax planning.