Investing for Income & Growth

In a low interest rate environment

21 May 2015

An introduction to The Fry Group

(Belgium)TFG Established in the UK in 1898

UK Chartered Financial Planning Firm

In Belgium since 1996 (Fulcra)

Offices in UK, Hong Kong, Singapore, Spain and Belgium

Traditionally looking after UK Expats abroad and then returning home

Assets under management £1.3 billion

Why this investment

seminar?

Running order

Global Market Overview

Chris HillsChief Investment Officer Investec Wealth

Portfolio Construction

Tom FosterSenior Investment Director Investec Wealth

How to Minimise Tax on Investments

Pauline CurranDirector The Fry Group (Belgium)

Q&A at end

How to secure income and capital growth in an era of negligible interest rates

Chris Hills – Chief Investment Officer

May 2015

Economic conclusions

And implications for investors

•Economic growth good in US/UK, being boosted in Europe/Japan, slowing in emerging markets

•Debt levels, both sovereign and consumer, slow to fall

•Corporate balance sheets and profitability encouraging

•Inflation not currently a problem

•Central Banks need reflation so will remain very accommodating

•UK political uncertainty reduced post-election, but European concerns remain

•The search for returns that exceed cash without volatility remains testing

Politics & Your Investments

“Politics is the art of looking for trouble,

finding it everywhere, diagnosing it incorrectly

and applying the wrong remedies”

Groucho Marx

Europe has made large strides to correct deficits...

...but there is still a lot to do

Source: Economic Perspectives

The Chancellor gets an unexpected bonus...

No need to adjust policies to please Coalition partners

Inflation hardly a current problem...

Source: Bank of America Merrill Lynch

...but this is why the Germans cracked and allowed QE in Europe

Investors seem much less concerned about a domino effect

...and Europe is well behind in the recovery cycle

Source: BlackRock Investment Institute, Thomson Reuters and IMF, November 2014. Notes: Real GDP is rebased to 100. The big

five financial crises are Spain (1977), Norway (1987), Finland (1991, Sweden (1991) and Japan (1992). The average recession

(two straight quarters of contraction) is based on advanced G20 countries since 1960. The recession range is based on an

average of the three best and worst recessions.

...but bank lending is increasing and this should boost economic recovery

•... But bank lending has turned and should accelerate recovery

Who wants to be a guinea pig for higher rates?

Parallels with US in the 1930s?

Interest rates didn’t return to “normal” for 25 years

Source: Nomura

When will rates go up?

The market’s view… Europe’s first rate rise has got closer since Mr Draghi started QE

Source: Morgan Stanley & Bloomberg May 2015

20

One view of the approach....

Source: Pantheon Macroeconomics

What might be the path of US interest rates?

But the members of the Federal Reserve are nowhere near in agreement..

Source: JPMorgan Asset Management

Will the dollar rally further?

Source: Trilogy Global Advisors

Japan took up the slack; ECB has joined the party

Source: Citigroup Apr 2015

Lower oil prices should fuel a more co-ordinated global recovery

Source: Deutsche Bank

Faster growth and a lower Euro...

... should lead to positive earnings surprises

Source: UBS

Japan shows the potential benefits from QE for equity markets.....

Source – Nomura

... and QE should drive equities upwards

Earnings & ValuationEnergy hampering 2015 profit growth

Goldman Sachs: 13/04/15

Healthy Earnings Growth ex Energy: 6-7% in 2015 & 2016

Earnings & ValuationEquity Valuations v Bonds

World Equities Very Cheap Relative To Bonds(The “price of growth” is cheap)

Source – Goldman Sachs 14/04/2015

29

...but complacency seems high

Source – Bloomberg, IW&I 14/04/15

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May-07 May-08 May-09 May-10 May-11 May-12 May-13 May-14

VIX

Investec Global Investment Strategy Group“Risk On” Rationale In A Nutshell

Similar Picture To 2014 Extending into 2015

Global Economy To Accelerate (~3% in 2014 -> ~3.3% in 2015, >3.5% in 2016)• America remains resilient: Political Sanity Continues to prevail

• Europe growth to firm – Oil, $, ECB QE + Unshackled Banks (post AQR), Fiscal “Neutral”

• China - having cleaned house at the expense of growth, growth returns to the top of the agenda.

• EM – follows in China’s slipstream

• Commodity price falls a boost to all except commodity producers

Post-Taper Monetary Policy Adjustments Will Be Managed Without Material Contagion- Rate rises well telegraphed in US – no “Bernanke shock” re-run

- Trajectory will err on side of “caution”

- Highly supportive global monetary policy backdrop – ECB “QE New,” / Japan “QE Max”,

- China loosening cycle beginning

Valuation: Risk Valuations Are Still Attractive• Earnings growth hampered by $ in 1H 2015, re-accelerate in 2H & into 2016

* EM & Europe have most scope for positive surprise

• Over 18m Equities to rise in line with earnings growth

• We do not expect bond yields to rise enough to undermine the valuation argument for equities

Liquidity Drives Potential for “Upside Surprise”.

Contact Details

Chris Hills

Chris Hills

Chief Investment Officer

Telephone: +44 (0)20 7597 1234

Email: chris.hills@investecwin.co.uk

Investec Wealth & Investment Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange and the Investec Group.

Please note that the value of investments and the income derived from them may fluctuate and investors may not receive back the amount

originally invested. Past performance is not necessarily a guide to the future. Current tax levels and reliefs may change and the investments

and investment services referred to may not be suitable for all investors.

Investec Wealth & Investment Management Limited is registered in England.

Registered No. 2122340. Registered Office: 2 Gresham Street. London. EC2V 7QP

Chris splits his time between the internal task of ensuring that the firm plays to its collegiate

strengths in research and portfolio management, together with the external tasks of

ensuring the firm receives the best input from its suppliers amongst the large investment

banks and asset management organisations and presenting the firm‘s thoughts about

current markets to a range of external clients and interested advisers.

In his capacity as Chair of the firm’s coverage of collectives, he has been responsible

for leading its efforts to develop relationships with external sources of business.

With over 40 years investment management and industry experience, Chris assists clients

in developing the appropriate investment benchmarks and policies to meet their requirements.

Managing Your InvestmentsTom Foster

Managing Your InvestmentsEnsuring understanding of risk and the mapping of ‘suitability’ outputs to each client’s investment mandate

•5 asset classes

•5 x 3 risk and objective matrix

o Low, Low/Medium, Medium, Medium/High, High

o Income, Balanced, Capital Growth

o Defined mandates

•Portfolio testing

o Asset allocation

o Quality

o Concentration and diversification

•Time horizons

•Suggested benchmarks

34

Asset Allocation Framework

– Medium Balanced

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Cash

AlternativeInvestments

CommercialProperty

Equities

Fixed Interest

35

Case Study – Medium Risk Balanced € Portfolio

18.5%

67.5%

6.0%6.0% 2.0%

Asset Allocation

Bonds

Equities

Property

AlternativeInvestmentsCash

42.5%

13.0%

5.0%

3.0% 4.0%

Geographic Allocation (Equities)

Europe

US

UK

Japan

Far East & EmergingMarkets

Asset Class Weighting Value

€

Income Yield

%

Income €

Fixed Interest 18.5%

Government

Bonds

4.5% 23,125 1.5% 346

Corporate Bonds 10.0% 50,875 4.4% 2,243

Indexed Linked 4.0% 18,500 1.2% 222

Equities 67.5%

European 42.5% 212,500 1.9% 3,974

US 13.0% 65,000 1.3% 819

UK 5.0% 25,000 3.2% 800

Japan 3.0% 15,000 1.0% 150

Far East Emerging Markets 4.0% 20,000 2.4% 482

Property 6.0%

European 3.0% 15,000 2.8% 420

International 3.0% 15,000 3.0% 450

Alternatives 6.0%

Absolute Return 4.0% 18,000 2.2% 396

Infrastructure 2.0% 12,000 4.8% 576

Cash 2.0%

Cash on Deposit 2.0% 10,000 0.0% 0

Total 100.0% 500,000 2.2% € 10,878

Growth / Income Mandates

Medium to High Risk Growth Tactical Asset Allocation

5.0%

84.0%

3.0%7.0% 1.0%

Bonds

Equities

Property

Alternative Investments

Cash

Medium Risk Income

Tactical Asset Allocation

30.0%

52.5%

7.5%

8.0% 2.0%

Bonds

Equities

Property

Alternative Investments

Cash

Our Investment ProcessCommon Sense

Darren Ruane

Dawn Kendall

Shilen Shah

Guy Ellison

Simon Lapthorne

Andrew Shard

Jimmy

Muchechetere

Peter Tasou

Sanjiv Tumkur

Gary Hobbs

Equ

itie

s Co

llectiv

es

Bonds

Chris Hills

(CIO)

John Haynes

John Wyn-

Evans

Kirsty

Eckersall

Andrew Summers

David Elliott

Stacey Johnson

+ 2

Stock

Sector

Committee

Front

Office

Members

Front

Office

Members

Collectives

Committee

Asset Allocation Committee

Front Office Members

ALL INVESTMENT COMMITTEES ARE A BLEND OF RESEARCH & SENIOR PRACTITIONERS.

DECISIONS ARE JOINT.

Structure is designed to make the whole firm a research resource

Contact Details

Tom Foster, Senior Investment Director

email: tom.foster@investecwin.co.uk tel: 020 7597 1473

Tom manages bespoke multi-currency portfolios including dollar, euro and sterlingstrategies for both onshore and offshore clients, including offshore trusts andinvestment holding companies. He also manages an IFA discretionary service. Beforejoining the International team at Investec Wealth & Investment in 2006, Tom spent fiveyears with Shore Capital managing discretionary UK and international clients. He is achartered member of the Chartered Institute for Securities and Investments.

Bath 01225 341580 Edinburgh 0131 226 5000 Liverpool 0151 227 2030

Belfast 02890 321002 Exeter 01392 204404 London 020 7597 1234

Birmingham 0121 232 0700 Glasgow 0141 333 9323 Manchester 0161 832 6868

Bournemouth 01202 208100 Guildford 01483 304707 Reigate 01737 224223

Cheltenham 01242 514756 Leeds 0113 245 4488 Sheffield 0114 275 5100

Investec Wealth & Investment Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange and the Investec Group.

Please note that the value of investments and the income derived from them may fluctuate and investors may not

receive back the amount originally invested. Past performance is not necessarily a guide to the future. Current tax

levels and reliefs may change and the investments and investment services referred to may not be suitable for all

investors.

Investec Wealth & Investment Management Limited is registered in England.

Registered No. 2122340. Registered Office: 2 Gresham Street. London. EC2V 7QP

Pauline Curran

Tax treatment of investments in

Belgium

Belgium – Tax Haven ?

Belgium – Investment Tax Haven

No wealth tax

No capital gains tax (for the most part)

Minimal tax on rental income

Pension savings plans

Life insurance

Tax on investment income

25%

with a few exceptions

15% Tax

Regulated Belgian bank savings accounts

(but €1,900 tax exempt)

‘Leterme’ Belgian government bonds

Transfers of intellectual property

Liquidation of corporate structures (under certain

circumstances)

Investment options

Directly held portfolios

Portfolios held within life insurance policies

Tax Treatment for Belgian Residents

Direct Investments

Interest (cash)

Coupons (bonds)

Dividends (equities)

Collective funds - where over 25% of fund in fixed income

assets tax on interest part of capital gain

Stock exchange taxes - on certain funds 1.32% on purchase

and redemption max €2,000

25%

Tax Treatment for Belgian Residents

Life insurance ‘Wrappers’

(Branch 23)

2% insurance premium tax

No tax on withdrawals

No tax on underlying income or gains

Tax Treatment for Belgian Residents

Life Insurance Wrappers

Interest (cash)

Coupons (bonds)

Dividends (equities)

Collective funds - where over 25% of fund in fixed income

assets tax on interest part of capital gain

Stock exchange taxes - on certain funds 1.32% on purchase

and redemption max €2,000

25%

Estate Planning Opportunities

Life Insurance WrappersLife insurance policies with potential for joint owners

(sometimes more)

AND

Multiple lives assured – i.e. doesn’t encash on first death

Nomination of beneficiaries

Gifting

Wrapped or unwrapped?

Belgium

For many people the life wrapper has the

edge

Also tax advantages in UK, France, Spain

Don’t let the tax tail wag investment

dog

Establish investment objectives

Growth

Income

Combination

Time frame

Risk tolerance

How can we help?

Strategic financial planning

Risk profiling

Selecting most appropriate solution – direct or insurance

wrapper

Adapting if moving location or a change in circumstance

Estate planning where appropriate

Working alongside specialist legal and tax professionals

Thank you !

Compliance

Please note that this presentation is for information only

and does not constitute advice.

Individuals should seek professional advice based on their

circumstances.

The information contained in this presentation is based on

our understanding of current pensions and taxation

legislation both of which are subject to change.

The Fry Group of companies comprises of Wilfred T. Fry Ltd – Taxation Consultants, Wilfred T. Fry

(Executor and Trustee) Ltd, The Fry Group (H.K.) Ltd, The Fry Group (Belgium) SA, and Wilfred T. Fry

(Personal Financial Planning) Ltd. The last company is authorised and regulated in the UK by the

Financial Conduct Authority is also passported under EU regulations and is authorised to act as a

financial adviser by the Monetary Authority of Singapore-license number FA095023. The Fry Group (H.K.)

Ltd is authorised to conduct investment business by the Securities & Futures Commission (SFC) in Hong

Kong and are members of the Hong Kong Confederation of Insurance Brokers. The Fry Group (Belgium)

SA is regulated in Belgium by the FSMA (Reg. No. 23345 A-B) and is also passported under IMD EU

regulations.

All levels and basis of, and relief from taxation illustrated here are subject to change without notice.

Questions?