dfm citywire retreat sept 2013

www.sandwdfm.com

September 2013

Smith & Williamson

The use of investment trusts and ETFs

in a Model Portfolio Service

David Amphlett-Lewis Mickey Morrissey

Citywire

New Model Adviser Retreat

12 –

13th

September 2013

For professional adviser use only | www.sandwdfm.com

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Contents

•

Introduction to Smith & Williamson

•

Why Smith & Williamson?

•

Funds Under Management

•

Investment Process

•

Investment Trust Sector

•

Investment Trusts vs

Unit Trusts/OEICs

•

Performance & Awards

•

Contact us


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•

Smith & Williamson Group

Founded in 1881

An independently-owned professional and financial services group

Private company, c.70% of equity mainly held by Directors and staff

Employs over 1,450 staff in offices across the UK and Ireland

Introduction to Smith & Williamson


4

*AUM as at 28.06.13

•

Smith & Williamson Investment Management

Privately-owned Limited Liability Partnership with nearly £14 billion of assets under management*

Over 170 investment managers

Investment offices in London, Glasgow, Bristol, Birmingham, Dublin and Belfast

Dedicated to supporting Independent Financial Advisers

Model Portfolio Service Capability

Wide range of investment instruments including Investment Trusts and ETF’s

Strong Balance Sheet

Why Smith & Williamson?


5

Funds under management and advice

Total Funds Under Management by type

(£m) %

Charities 1,142.0 8.2

Corporates 1,231.9 8.9

Pension Funds 1,458.9 10.5

Retail** & Offshore Funds 1,338.9 9.7

Cash Management 115.0 0.8

Private Clients, Trusts & Other* 8,578.3 61.9

Total 13,865.0 100.0

*

Other includes accounts or portfolios not split out in the categories in the above table, and allows for the overlap between private clients and pooled funds. **

FCA regulated/recognised. Please note there are both private client and institutional portfolios included in some of the categories in the above table.

Source: Smith & Williamson Investment Management (unaudited) as at 28.06.13.

Total Funds Under Management June 2013

Total 13,865.0

Charities

Corporates

Pension Funds

Retail** & Offshore Funds

Cash Management

Private Clients Trusts & Other*

61.9%

0.8%

8.2%8.9%

10.5%

9.7%


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Research & investment process

Strategic

Distribution Technology Asset Allocation Risk

Constraints

Tactical

Smith & Williamson Asset Allocation Committee

Smith & Williamson Investment Research

David Amphlett-Lewis

Head of ETF Research

Peter Lowe

Head of Collectives

Research

James Burns

Head of Investment

Trust Research

Nick Marshall

EM & European

Open-Ended Specialist

Exchange Traded Products Open Ended Funds Closed Ended Funds Direct Fixed Income


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•

Assess a wide range of investment vehicles within each asset class

•

Includes closed-ended funds, open-ended funds, ETF’s

and direct fixed interest securities

•

In-house sector specialists analyse sector performance and relative valuations, using quantitative research

•

Assess risks, opportunities and themes for the sector, and specific characteristics of individual investments such as price, value and style

•

Qualitative assessment involves meetings with company management (typically hold over 500 meetings with management every year)

Investment selection


8

Product mix

Source: Smith & Williamson Investment Management and StatPro

as at 31.07.13

Closed Ended ETFS Open Ended Unit Trust Cash

0%

20%

40%

60%

80%

100%

3-

Defensive 4 –

Defensive Income 5 –

Balanced Income 6 –

Balanced Growth 7 –

Growth 8 –

Dynamic Growth


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Investment Trust SectorMarket Cap £94bn, Net Assets £103bn

Universe by asset class (£m market cap) IPOs since 2009 (£m current market cap)

Source: Numis

Securities Investment Companies Research, Thomson Financial Datastream

as at 03.09.13

41,470

11,912

6,410

5,781

8,683

10,917

4,9484,372

Developed equity

Asia/Emg

Mkts

Sector Specialist

Infrastructure

Property

Private Equity

Hedge Funds

Debt

43,547

14,309

6,800

5,241

10,874

12,428

5,2994,718


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Attractive outperformance relative to open-ended funds

Source: Smith & Williamson Investment Management and Canaccord

Genuity

31st December 2012. Canaccord

sources: Morningstar, IMA, Thompson Financial Reuters.

Investment Trusts vs. OEIC/Unit Trusts –

10 year annualised outperformance to 31 December 2012 (%)

Unweighted

£

adjusted

0%

1%

2%

3%

4%

5%

6%

7%

8%

Global Growth

Global Growth &

Income

UK Growth & Income/UK

Equity Income

UK Growth/UK

All Companies

North Europe ex UK Global Emerging

Asia Pacific ex Japan

JapanAmerica


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Access to wide range of asset classes

•

Private Equity

•

Hedge

•

Property

•

Infrastructure

•

Aircraft Leasing

•

Litigation Finance

•

Reinsurance

•

Secured Loans

•

Distressed Debt

•

Real Estate Debt


12

How to access Neil Woodford

Edinburgh IT v Invesco

Perpetual Income Source: Bloomberg, as at 30 April 2013


13

How to access Hugh Young

Aberdeen New Dawn v Aberdeen Asia Pacific Source: Bloomberg, as at 30 April 2013


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•

Investment trusts routinely trade at a discount or premium to underlying asset value

•

Opportunity to generate alpha by exploiting discount movements

•

Discount control mechanisms

Discounts


15

Gearing

Scottish Mortgage v MSCI World

Source: Bloomberg, as at 30 April 2013


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Performance & awards•

Citywire

Wealth Manager Awards 2012, 2011 & 2010: Winner of Best Large Firm

•

Portfolio Adviser Wealth Manager Awards 2013: Winner of Gold Award (Large) for Absolute Return Portfolio, Gold Award (Large) for Balanced Portfolio, Platinum Award (Large) for

Balanced Portfolio and Gold Award (Large) for Aggressive Portfolio

•

Citywire

Wealth Manager Awards 2012: Winner of Steady Growth Portfolio

•

Spear’s Wealth Management Awards 2012/13 –

Winners

Winner of Asset Management Firm of the Year for High Net Worths

•

Citywire

Wealth Manager Awards 2011: Best Balanced portfolio and Best Aggressive portfolio

•

Investors Chronicle and FT Wealth Management Awards 2011: Winner

of the Best Balanced Wealth Manager and shortlisted as Best Growth Wealth Manager and Best Cautious Wealth Manager.

•

PAM Awards 2011: Winner of Investment Performance –

Absolute Returns Portfolios.

•

Spear’s Wealth Management Awards 2010 –

Winners

Winner of Asset Management Firm of the Year for Ultra-High Net Worths

•

STEP awards 2009/10 and 2010/11: Winner of Investment House of the Year


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London investment team biographies

David joined Smith & Williamson in 2010 as a Director from Deutsche Bank where he was an Investment Manager. David began his career with Societe

Generale

Investment Management in 1999 where he was involved with establishing a portfolio management service for individual and company pension schemes. A Member of the Chartered Institute for Securities & Investment, David is also a graduate of the Economics Department of Birmingham University.

Direct line: 020 7131 [email protected]

James joined Smith & Williamson in September

1999 and started working on the investment trust

desk in January 2001. He is now head of the Multi-Manager desk, managing the Smith & Williamson MM Global Investment Fund and Smith & Williamson MM Cautious Growth Fund (both funds of investment trusts), and is co-manager of the Smith & Williamson MM Endurance Balanced Fund (a fund of open-ended funds). James sits on the Asset Allocation Policy Committee and also co-

ordinates the investment trust recommended list for the Private Client department. James graduated from the University of St. Andrews in 1998 with an MA (Hons) and is a Chartered Member of the Chartered Institute of Securities & Investment.


David Amphlett-Lewis -

Partner James Burns -

Partner

Amanda Keyton –

Assistant Relationship Manager

Amanda assists the team in all client affairs. She has over 15 years experience in an administrative and front office support role, having started her career at Societe

Generale. Amanda joined Smith and Williamson from Deutsche Bank and has worked with David since 1999.



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Sales & Sales support

Mickey joined Smith & Williamson in December 2012 as Director -

Head of UK IFA Sales. He is responsible for growing intermediated sales into the DFM, Guided Architecture and MultiManager

business lines. Previously Mickey was Head of Distribution at Liontrust

Asset Management for ten years and prior to that worked at Merrill Lynch Investment Managers for 12 years. Mickey was commissioned into the Irish Guards where he served for 12 years before joining the investment management industry in 1989. Mickey is a Fellow of the Chartered Institute for Securities & Investment.


Mickey Morrissey –

Head of UK IFA SalesJulian joined Smith and Williamson Investment Management in November 2011 as Head of Broker Desk. He began his career in Financial Services in 1997 at Credit Lyonnais Rouse working in Commodity Derivatives before transferring to Laing and Cruickshank and managing Private Client portfolios. He has also worked at UBS Wealth Management before joining Close Asset Management in 2009 establishing their Discretionary Portfolio Management service for Independent Financial Advisers. Julian has a BA Honours degree in Politics and Social Psychology from Loughborough University and a Diploma in Management Studies from the University of Westminster. He is a Chartered Fellow of the Chartered Institute for Securities and Investment.


Julian Polnik -

Head of Broker Desk

For further information, please visit: www.sandwdfm.com

Note:On 7 May 2013 Smith & Williamson Investment Management Limited became a Limited Liability Partnership (LLP). Former Directors of the limited company became Partners of the new LLP.


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Important information

Risk warnings•

Investment does involve risk. The value of investments can go down as well as up. The investor may not receive back in total the original amount invested.

•

Past performance is not a guide to future performance.•

Rates of tax are those prevailing at the time and are subject to

change without notice. Clients should always seek appropriate tax advice from their financial adviser before committing funds for investment.

•

When investments are made in overseas securities, movements in exchange rates may have an effect on the value of that investment. The effect may be favourable or unfavourable.

•

Investing in alternative assets involves higher risks than traditional investments and may also be highly leveraged and engage in speculative investment techniques, which

can magnify the potential for investment loss or gain.

•

Investments in emerging markets may involve a higher element of risk due to political and economic instability and underdeveloped markets and systems.

•

Please note that bond funds may not behave like direct investments in the underlying bonds themselves. By investing in bond funds the certainty of a fixed income for a fixed period with a fixed return of capital are lost.

•

Shares in AIM companies are likely to be high risk and volatile.

Their value, and the income arising from them, may go down as well as up, and there is the possibility that investors could lose their entire investment. Shares in an AIM company may be illiquid and it may be difficult or impossible to sell them. Investors should take independent investment and taxation advice regarding AIM investments and qualifying tax relief, which can be provided by Smith & Williamson.

•

In relation to any guided architecture investment options, Smith

& Williamson Investment Management (SWIM) is unable to assess or provide advice on the suitability of any product or service for individual circumstances. No consideration has been given to the suitability of any investment or service for the particular needs of any recipient. SWIM will not be responsible to any other person for providing the protections afforded to retail investors or for advising on any investment as a result of using

this service.


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Disclaimer

This document contains information believed to be reliable but no guarantee, warranty or representation, express or implied, is given as to their accuracy or completeness. This is neither an offer nor a solicitation to buy or sell any investment referred to in this document. Smith & Williamson Investment Management documents may contain future statements which are based on our current opinions, expectations and projections. Smith & Williamson Investment Management does not undertake any obligation to update or revise any future statements. Actual results could differ materially from those anticipated. Appropriate advice should be taken before entering into transactions. No responsibility can be accepted for any loss arising from action taken or refrained from based on this publication. The officers, directors and employees of Smith & Williamson Investment Management, and affiliated companies and/or their officers, directors and employees may own

or have positions in any investment mentioned herein or any investment related thereto and may trade in any such investment.

Issued by Smith & Williamson Investment Management which is a trading name of NCL Investments Limited and Smith & Williamson Investment Management LLP. Authorised and regulated by the Financial Conduct Authority (LLP registration number is 580531).

ARC Private Client Indices (“PCI”) are based on historical information and past performance is not indicative of future performance. PCI are computed using a complex calculation and the results are provided for information purposes only and are not necessarily an indicator of suitability for your specific investment or other requirements. ARC does not guarantee the performance of any investment or portfolio or the return of an investor’s capital or any specific rate of return. ARC accepts no liability for any investment decision made on the basis of the information contained in this report. You should always complete your own analysis and/or

seek appropriate professional advice before entering into an agreement with any PCI Data Contributor. The content is the property of ARC or its licensors and is protected by copyright and other intellectual property laws. Use

of the information herein is governed by strict Conditions of Use as detailed on www.assetrisk.com/pci

Ref: 998/2013/db

dfm citywire retreat sept 2013

Economy & Finance

use of investment trusts

professional adviser

smith williamson group

pooled funds

year investment selection

openended funds source

company management

advice total funds