Ethical Balanced to Adventurous Portfolio Report November 2018
Important Information This portfolio is managed with an ethical bias. The majority of the underlying funds invest with an ethical approach, some more strict in approach than others. It should be noted that it is not possible to fully asset allocate a portfolio with an ethical bias due to the limited number of funds available and because some asset classes, notably property, do not generally lend themselves to ethical investing. However, property does carry investment merit and is included in the portfolio in order to create investment diversification. As a result of the limited number of funds available, and with the strict investment criteria in place, the model portfolios may vary significantly from their targets at times. If you have particularly strong ethical views you should discuss these with your adviser who will explore the alternative investment strategies available to you. The model portfolio represents the range of funds that together we consider best suited to your attitude toward investment risk. The service we provide is an advisory service which means that we will revert to you for your explicit agreement before we make any changes to the composition of your portfolio. This means of course that at any given time, your actual portfolio of funds may diverge to a greater or lesser degree from the model until such time as your portfolio is reviewed and rebalanced in line with the Client Services Agreement you have agreed to.
Ethical Portfolio Balanced to Adventurous Market Perspective As a result we feel that October s sell-off was a short-term turn in momentum, we do not see it having been driven by a change in fundamentals. October turned out to be quite a month for global equity markets, which posted their worst month for six years. Fears over quicker than anticipated US interest rate hikes and slower global growth spooked investors who have already been contending with trade wars, Brexit uncertainty and the Italian government s budget row with the EU. The Fed has been telegraphing its interest rate intentions to markets for some time. Bond markets have been trying to price this information in, with some success, but it seems that equity investors have only just woken up to the news and October s panic selling ensued. Fortunately, some stability looks to be returning to the markets but volatility will remain. With the exception of the Italian government s budget announcement, none of the concerns that spooked the markets are new. As a result we feel that October s sell-off was a short-term turn in momentum, we do not see it having been driven by a change in fundamentals. Consequently, equities remain our favoured asset class over the medium to long-term. Diversification is key though and our top-down view remains focused on the belief that there is long-term value to be had in equities, corporate bonds and commercial property versus both government bonds and cash. 3
Description, Aims, Objectives The portfolio includes a blend of assets with a bias towards UK and global equities, combined with lower weightings of UK and global fixed interest securities and commercial property funds. The long term objective is capital appreciation, achieved by using well researched and established investment principles. The portfolio is ideally suited to investors who are able to accept short term volatility in order to achieve potentially higher returns than cash deposits and inflation over the medium to long term. The portfolio typically has an FE Risk Score in the range of 60 to 70, meaning that, over the medium to long term, it is unlikely to reflect more than 70% of the volatility of the FTSE 100 Index. Portfolio Key Facts Ongoing Charge Figure (OCF): 0.84% p.a. Benchmark: CDV E Portfolio Target Availablility: Individual Savings Account, General or Collective Investment Account, Personal Pension, SIPP (Self- Invested Personal Pension) and Investment Bond (both Onshore and Offshore) FE Risk Score: 75 (74) The OCF shown above does not include any fee that your adviser may charge and is the total of known recurring charges levied within the funds. For the purposes of comparison, it represents the known recurring annual charges (excluding transactional charges and platform costs) at the date of production of this factsheet, and therefore the actual cost will depend on the platform selected, the level of adviser fee charged and the stated transaction charges at a given point in time. Further details are available on request. Key Investor Information Documents and individual fund fact sheets for the underlying funds are available on request. 4
Ethical Portfolio Balanced to Adventurous Performance, Composition, Risk Holdings Cumulative Performance Versus Benchmark (%) Multi Asset Funds 38% Henderson Global Responsible Managed Liontrust Sustainable Future Managed Royal London Sustainable Managed Kames Ethical Cautious Managed Global Equities 35% BMO Responsible Global Equity Liontrust Sustainable Future European Quilter Ethical Stewart Investors Worldwide Sustainability Months 1 3 6 12 36 Ethical Balanced to Adventurous Portfolio 1.86% -5.25% -1.79% 0.53% 31.92% Target Portfolio 0.86% -5.64% -3.38% -1.50% 28.53 UK Retail Price (C) - 0.85% 1.57% 3.20% 9.48% Halifax Liquid Gold (D) 0.01% 0.03% 0.05% 0.10% 0.25% Performance To: 12/11/2018 Source: Financial Express Portfolio & Target Versus Inflation Since Launch UK Equities 13% BMO Responsible UK Income Royal London Sustainable Leaders Property 8% Legal & General UK Property Feeder Cash, Fixed Interest & Absolute Return EdenTree Amity Sterling Bond 6% Rathbone Ethical Bond Past performance is not a guide to future performance. The value of investments and any income from them will fall as well as rise; you may get back less than the amount invested. 5
Performance, Composition, Risk Asset Allocation Top Ten Holdings Company Holding Unilever 1.33% Amazon.com Inc 0.97% Smith (DS) PLC 0.86% Prudential PLC 0.86% Xylem Inc 0.83% Microsoft Corp 0.76% Waters Corp 0.67% Regional Allocation Henkel AG & Co KGAA 0.65% Union Pacific Corp 0.60% Kingspan Group 0.58% Sector Allocation 6
Ethical Portfolio Balanced to Adventurous Ethical Funds & Screening Criteria Negative Screening Positive Screening Alcohol Production Animal Testing Armaments Environmental Damage Gambling Nuclear Power Oppressive Regimes Pornography Tobacco Community Involvement Employee Welfare Environmental Policy Packaging Reduction Sustainable Forestry Engagement With Companuees Undertakes Site Visits EdenTree Amity Sterling Bond BMO Responsible Global Equity BMO Responsible UK Income Henderson Global Sustainable Equity Henderson Global Responsible Managed Kames Ethical Cautious Managed Liontrust Sustainable Future Absolute Growth Liontrust Sustainable Future Corporate Bond Liontrust Sustainable Future European Growth Liontrust Sustainable Future Managed Quilter Ethical Rathbone Ethical Bond Royal London Sustainable Leaders Trust Royal London Sustainable Managed Growth Royal London Sustainable World Trust Royal London Sustainable Diversified Trust Stewart Investors Worldwide Sustainability * * Stewart Investors operate through engagement with the companies rather than specific screening criteria. The fund manager positions the fund to benefit directly from emerging sustainability opportunities and trends, including renewable energy, clean technology solutions, waste recycling, water and energy conservation. Every six months, the fund is screened by an external sustainability adviser against a series of internationally agreed sustainability standards for business, including the UN Human Rights Norms for Businesses and the UN Global Compact Principles. If engagement fails to progress sufficiently within a reasonable time period the fund manager will commit to exit the stock. 7
Ethical Funds & Screening Criteria The Chase de Vere Ethical Portfolios are designed to provide attractive risk targeted investments that meet investors desires to integrate their ethical, responsible, social and environmental values into investment decisions. Typically there are three approaches that Investment Managers employ in their Socially Responsible Investment ( SRI ) strategies: 1. Negative screening enables the Investment Manager to rule out direct holding in industries that fail to meet their preferences, which may include: alcohol and tobacco, animal testing for cosmetics, armaments, environmental (biodiversity, pollution, greenhouse gases and ozone depleting chemicals), gambling, genetic modification, human rights abuses, intensive farming and the processing and retailing of certain food types, nuclear power and pornography. 2. Positive screening allows Investment Managers to actively seek to invest in only those companies that reflect their own values and standards, which may include companies whose products or services are of longterm benefit to the communities and/or environments in which they operate, with attributes including strong environmental and employment practices, openness about their activities, the use of environmental technologies (including renewable energy and pollution control), energy conservation, sustainable forestry, an equal opportunities policy and the provision of social housing and community regeneration. 3. Through dialogue and engagement Investment Managers, as shareholders in companies, aim to use their influence to encourage more responsible business standards in the companies in which they invest. This more active approach can be done directly through meetings and voting at company AGMs. Investment Managers will engage on areas such as inappropriate remuneration, unfair labour practices, social responsibility and climate change. 8
Ethical Portfolio Balanced to Adventurous Additional Information Financial Express FE Risk Scores provide a single, easy to understand measurement of the relative risk of individual investments or portfolios. In the UK, FE Risk Scores define risk as a measure of volatility relative to the FTSE 100 index, which has a risk rating of 100. Instruments more volatile than the FTSE 100 have a score above 100 and vice versa, giving a reliable indication of relative risk. FE Crown Fund Ratings are quantitative ratings ranging from one to five designed to help investors identify funds which have displayed superior performance in terms of stock picking, consistency and risk control. The top 10% of scores in each grouping - five FE Crowns The next 15% - four FE Crowns The next 25% - three FE Crowns The next 25% - two FE Crowns The bottom 25% - one FE Crown Important information All data is correct at 12/11/2018. Past performance is not a guide to future performance. The value of investments and any income from them will fall as well as rise; you may get back less than the amount invested. Higher volatility investments are subject to sudden and large falls in value and could result in a loss equal to the sum invested. Certain investments are not readily realisable and investors may experience difficulty in realising the investment or in obtaining reliable information on the value or associated risks. Changes in rates of exchange may have an adverse effect on the value or price of, or income generated by, investments denominated in currencies other than Sterling. Portfolio returns do not show the impact of professional fees which will be shown separately within your Key Investor Information Documents. This document has been prepared and published by Chase de Vere Independent Financial Advisers Limited (CDV) (FCA number 137914) who are authorised and regulated by the Financial Conduct Authority. The information and opinions contained herein are based upon sources believed by CDV to be reliable, but which may not have been independently verified and no guarantees, representations or warranties are made as to its accuracy, completeness or suitability for any purpose. Any opinion or estimate expressed in this publication is CDV s current opinion as of the date of this publication and is subject to change without notice. Any references to the impact of taxation are made in the context of current legislation and may not be valid should levels and/or bases of taxation change. Some fund managers may levy an additional fee which can vary on a regular basis and therefore cannot be determined in advance. As such, these fees will not be included within the assumed charges or on any illustrations you receive. Portfolio Target comprises the weighted sector average appropriate to the relevant underlying portfolio. 9