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UKAS 360Participant Report

Executive Summary

- 1 -Research in Finance¦ UKAS 360 All rights reserved ¦ PRIVATE AND CONFIDENTIAL - NOT FOR DISTRIBUTION

• The industry is still predominantly male and aged between 36 and 55 years old.

• DFMs and Investment Advisers are more aligned in their sector outlook for the next 6 months, this is likely to be the result of apparent volatility through geopolitical issues, such as Russia.

• Other sectors such as commodities are under scrutiny by DFMs due to dollar appreciation and falling oil prices.

• Frontier markets and GEM are still appealing to all sectors of the market, in a quest to deliver higher returns from a small percentage of a low risk portfolio.

• DFMs are maintaining a cautious position during the current market conditions while Investment Advisers are finding their clients have an increased appetite for risk.

• The market is still very much a people business: the preferred method of communication is through events. Social media, whilst consumed by the market is not seen as a platform to make actual investment decisions.

• There is still an over supply of content distributed on email and social media platforms.

• Trade titles are consumed regularly in both print and digitally, the market looks at broader ‘brands’ online such as the FT or Citywire.

• Factsheets play a crucial role in the research and analysis of funds: it is vital they effectively present any fund’s key attributes such as fees, volatility and performance.

Contents


The following slides are the collated responses from the study amongst the following:

Telephone and face to face interviews with:

• 10 investment specialist advisers and 10 discretionary fund managers from each Wave

Online surveys:

Wave 1:

• 243 participants (DFMs, Investment Specialist and Generalist Advisers)

• October 2013 – January 2014

Wave 2:

• 266 participants (DFMs, Investment Specialist and Generalist Advisers)

• April 2014 – May 2014

Wave 3:

• 187 participants (DFMs and Investment Advisers)

• July 2014 – September 2014

Wave 4:

• 201 participants (DFMs and Investment Advisers)

• October 2014 – November 2014

- 3 -

Average Age Gender

Average Size of firms (number of employees) Segmentation of participants

Research in Finance¦ UKAS 360 All rights reserved ¦ PRIVATE AND CONFIDENTIAL - NOT FOR DISTRIBUTION

90.2

In office

At firm

12.1

36-55Years

10% Female

20% DFMs/Wealth Managers

6

90% Male

80% Top Tier Advisory

Demographics

Investment appetite and expectations


10 leading DFMs

- 5 -

Actual

2.5


What areas are you researching/getting excited about over the next three to six months? Unprompted

n = 10

Wave 1:Wave 2:

Wave 4:

Europe is seen as having the most potential over the next quarter.

Wave 3:


What should investors steer clear of over the next three to six months? Unprompted

Wave 2:

Wave 3:

Wave 1:

Investors are expecting to reduce allocation of government bonds and property funds

Wave 4:

10 leading DFMs n = 10

10 Investment Specialist Advisers

- 7 -

Actual

Preferred

2.5


Wave 3:Wave 4:

Wave 1:

Japan and Europe are seen as having the most potential over the next quarter.

Wave 2:

What areas are you researching/getting excited about over the next three to six months? Unprompted

n = 10

- 8 -

Actual

Preferred

2.5


Wave 1:

Wave 4:

What should investors steer clear of over the next three to six months? Unprompted

Russia is the main area to reduce exposure to in the coming months.

Wave 2:

Wave 3:

n = 10 10 Investment Specialist Advisers

Given increasing market volatility, are you more or less likely to allocate to the following Emerging Markets in 2015?


n = 204

-0.83

-0.97

-1.81

0.42

-0.33

-1.02

-1.37

-0.21

-5.00 -3.00 -1.00 1.00 3.00 5.00

IAs

DFMs

The majority will continue the same stance on Emerging Markets.

Less likely More likely

India

China

BRICs

GEM

Less likely The same More likely

Source: UKAS 360 Wave 4, November 2014

GEM is most likely to be net positive.

Research in Finance¦ UKAS 360 All rights reserved ¦ PRIVATE AND CONFIDENTIAL - NOT FOR DISTRIBUTION - 10 -

On average, with the current economic climate, have you noticed a change in your clients' attitude to risk?

Overall clients are accepting less risk than they were a year ago.

19%

25%

17%

69%

72%

69%

12%

3%

14%

Overall

DFMs

IAs

Lower risk than a year ago About the same as a year ago More risk than a year ago

-0.34

-1.11

-0.18

-5.00 -3.00 -1.00 1.00 3.00 5.00

Overall

DFMs

IAs

Less risk More risk

n = 203


Average combined scores:


Change in clients’ attitude to risk since last year

Their comments reflect that all are still cautious, with a handful of clients prepared to accept more risk.

DFMs IAs

“We are briefing clients that we are cautious and we are taking some risk off the table and I think clients are happy with that”

“…it’s always been the balanced and the slightly cautious who have several asset classes for diversification and hopefully give me some kind of return in that market but defend your capital in down markets, they’re still taking the bulk of the money”

“…they are well advised, most of my clients are long standing … they’ve gone through all the twin towers … different stock market crashes … and they’ve come through it with flying colours and they understand … clients understand what they should expect”

“Our clients’ attitude to risk has been fairly cautious anyway, … a lot of them are very much looking at capital protection though rather than capital growth”

“… I think clients are more cautious these days … if you’ve been in the market for the last 2-3 years you’ve actually done quite nicely, definitely haven’t seen in the last 1-2 years a sudden rush of people getting excited about the market, it’s all been very measured actually”

“I think people are generally feeling a little more confident, we are trying to educate clients on the lack of correlation between economic data and stock market returns. Because a lot of clients are feeling much happier with the economic climate … we are keen to stress that that doesn’t always feed through into stock markets..”

“We’ve got a handful of clients who are very active and very keen in what’s going on economically speaking with the markets and even their attitude to risk hasn’t changed at all in the last 5 years, perhaps because they see what they want and what their expectations are and they’re not swayed by external factors shall we say”

“… who wouldn’t have had that much out of cash and investing things for longer terms, they’ve dipped their toes in and seen its done reasonably well and thought let’s put more in. [They] wouldn’t have invested and it would have sat quite happily in the bank”

“I saw a client today who 12 months ago was quite cautious, … he’s definitely more aggressive in terms of his approach to investment but only with money he can afford to lose, … he’s now prepared to take more risk with some of his money than he was a year ago”

n = 10

- 12 -

Media


Where’s your ‘GO TO’ place for asset allocation ideas and inspiration (buy or sell)? Unprompted


n = 173

Overall advisers and DFMs trust their in-house resources for asset allocation ideas.

8%

1%

1%

2%

1%

1%

1%

1%

1%

1%

1%

1%

1%

10%

15%

5%

4%

2%

3%

5%

2%

3%

2%

2%

2%

2%

1%

1%

2%

2%

1%

1%

0% 5% 10% 15% 20%

In house

Financial Express/Trustnet

Morningstar/OBSR

Citywire

JP Morgan

Own research

Towers Watson

FT

Distribution Technology

Standard Life

Trade press

Fund managers

Old Mutual

All sources

Emerging Market funds

Invesco Perpetual

Jupiter

New Model Adviser

WMA Private Investors Indices

DFMs

IAs



Which trade magazines/websites do you read/visit and how frequently? Unprompted

Financial Adviser is preferred overall and read approx. twice weekly, Citywire is favoured overall as a publisher.

1%

3%

2%

6%

6%

5%

4%

2%

1%

4%

3%

2%

1%

1%

1%

1%

1%

36%

29%

27%

17%

17%

17%

17%

10%

9%

4%

4%

6%

4%

4%

3%

2%

2%

1%

2%

1%

1%

0% 10% 20% 30% 40%

Financial Adviser

New Model Adviser

Money Marketing

Citywire

FT

Investment Week

Trustnet

Money Management

Investment Adviser

Citywire Wealth Manager

Fund Strategy

Professional Adviser

Bloomberg

Morningstar

Portfolio Adviser

Investors Chronicle

Fundweb

Money Week

Financial Planner

Fundslibrary

The Economist

DFMs

IAs

83

100

101

157

189

89

161

28

51

51

172

65

219

128

52

79

96

48

12

112

144

Financial Adviser

New Model Adviser

Money Marketing

Citywire

FT

Investment Week

Trustnet

Money Management

Investment Adviser


Fund Strategy


Bloomberg

Morningstar

Portfolio Adviser

Investors Chronicle

Fundweb

Money Week

Financial Planner

Fundslibrary

The Economist

n = 194


Average times per year:


If you could only read three trade publications which three would you choose? Prompted

DFMs prefer Citywire Wealth Manager whereas IAs prefer Financial Adviser.

DFMs (Net Average Score) Investment Advisers (Net Average Score)

DFMs (% of ranked first) Investment Advisers (% of ranked first)


Investment Week

Fund Strategy

New Model Adviser

Money Management

Financial Adviser

Investment Adviser

Money Marketing


IFA Magazine

Portfolio Adviser

Financial Adviser

New Model Adviser

Money Marketing


Money Management

Investment Week

Investment Adviser


Fund Strategy

IFA Magazine

Portfolio Adviser

47%

18%

6%

15%

12%

3%

0%

3%

0%

3%

0%


Investment Week

Fund Strategy

New Model Adviser

Money Management

Financial Adviser

Investment Adviser

Money Marketing


IFA Magazine

Portfolio Adviser

25%

24%

10%

10%

9%

13%

6%

4%

1%

2%

0%

Financial Adviser

New Model Adviser

Money Marketing


Money Management

Investment Week

Investment Adviser


Fund Strategy

IFA Magazine

Portfolio Adviser

n = 36 n = 165



Which, if any, do you consider to be the best industry websites? Prompted

DFMs preferred websites are FT.com and Citywire Wealth Manager, IAs mostly use FE TrustNet.

DFMs (Net Average Score) Investment Advisers (Net Average Score)

60%

60%

51%

31%

29%

26%

23%

20%

14%

6%

6%

3%

3%

3%

FT.com


FE TrustNet

FT Adviser

Morningstar

Citywire New Model Adviser

Investment Week

FundWeb

Money Marketing


Portfolio Adviser

Panacea Adviser

IFA Life

IFA Magazine

37%

27%

26%

21%

21%

21%

10%

9%

6%

4%

2%

2%

2%

Citywire New Model Adviser

FT.com

FT Adviser

Morningstar


Money Marketing

Investment Week

FundWeb


Panacea Adviser

Portfolio Adviser

IFA Life

IFA Magazine

n = 35 n = 163



Are there any journalists or other market commentators whose opinion you particularly rate? Unprompted n = 61

JPMAM’s Stephanie Flanders is most named as a good market commentator, followed by BBC’s Robert Peston.

2%

1%

1%

1%

1%

1%

2%

1%

10%

4%

3%

3%

3%

1%

1%

2%

1%

2%

2%

1%

0% 2% 4% 6% 8% 10% 12% 14%

Stephanie Flanders (JPM)

Robert Peston (BBC)

Martin Wolf (FT)

Jeff Prestridge (Financial Mail)

Justin Urquart Stewart (7IM)

Ambrose Evans-Pritchard (Telegraph)

Anthony Hilton (Evening Standard)

Brian Tora (FS/JM Finn)

FT

Lawrence Gosling (IW)

Merryn Somerset-Webb (Money Week)

Rob Reid (Syndaxi)

The Economist

DFMs IAs

Others mentioned once: Alistair Mundy, Analytics Researchers, Alen Mattich, Anatole Kaletsky, Anna Fedorova, Artemis market commentaries, APCIMS, Bill Blain, Brett Davidson, Capital Economics, David Stevenson, FE Analytics report, Fund managers in general, FT/Lex, Gary Corcoran, Hannah Smith, Henry Dixon, Ibbotson, Investec Market commentaries, Jeff Saut, Jeremy Warner, Jim O'Neill, Joachim Fells, John Kay, John Ficenec, JP Morgan team, Kay Ingram, Keith Wade, Mark Dampier, Max Keiser, Mike Riddell, Mislav Matejka, Money Week, Ned Cazalet, Neil Bailey, Nick Cicutti, Nick Paler, Paul Lewis, Richard Jeffrey, Roger Bootle, Rosie Sells, Simon Thompson, Steve Bee, Tom Elliott, Tony Wickenden, Tony Hazell, Willem Buiter.


Provider communication



How useful are the following from provider firms/fund managers?

Live events/seminars are preferred method of delivery from providers supported with regular market commentary.

n = 199

3.53

3.52

3.21

2.94

3.14

2.94

2.94

2.63

1.85

1.75

2.26

3.40

3.40

3.26

3.23

3.14

3.05

2.94

2.65

2.32

2.24

2.09

1.0 1.5 2.0 2.5 3.0 3.5 4.0

Live events/seminars by groups of fund managers

Live events/seminars by individual fund managers

Regular market commentary

Provider/fund manager websites

Email updates

Email investment bulletins

Live teleconferences/Live web conferences

Fund manager videos

Hard copy updates

Hard copy investment bulletins

Social media updates

DFMs

IAs

Not at all useful Very useful



Volume of material received and preference

Overall advisers wish for more face to face contact – at least once a quarter.

In general, how much of the following do you receive? How frequently would you prefer contact from provider firms/fund managers?

n = 199

2.14

2.14

1.91

1.86

0.74

-0.86

2.00

1.62

1.03

0.98

-0.06

-1.48

-5.00 -2.50 0.00 2.50 5.00

Trade magazines/Papers

News alerts and other emailsfrom trade

magazines/websites

Printed marketing materialsfrom investment houses

Email marketing materialsfrom investment houses

Telephone calls frominvestment houses

Face to face contact withinvestment houses

DFMs Score

IAs Score

42

11

10

9

69

8

4

2

55

17

12

13

34

8

8

3

0 20 40 60 80

Email

Direct Mail

Events (live, out of the office)

Events (office based egteleconferences/web…

Social Media

Telephone

Face to face meetings

Skype/online meetings

DFMs IAs

Not enough Too muchNumber of times per year


- 21 -

Ratings and research


- 22 -

Do you use/consider 3rd party ratings for research? If yes, who?


Use of Ratings n = 184

Overall 70% consider 3rd party ratings as part of research – Morningstar being the most popular.

Yes, 38%

Yes, 78%

No, 62%

No, 22%

0% 20% 40% 60% 80% 100%

Discretionary

Top Adviser

n = 129

Quantitative:

Qualitative:

79%

14%

36%

71%

23% 13%0%

20%

40%

60%

80%

100%

Morningstar OBSR AnalystRatings (Gold, Silver etc)

Rayner Spencer Mills AAAratings

S&P Capital IQ PlatinumRatings (was AAA)

Discretionary

Top Adviser

91%

78%70%

30%

52%

26%

84%

75%69%

56%

34%

19%

0%

20%

40%

60%

80%

100%

MorningstarStar Ratings

CitywireManager

Ratings (AAA)

FinancialExpressCrownRatings

FinancialExpress

Alpha ratings

LipperLeaders

DistributionTechnologyRisk Ratings

1-10

Discretionary

Top Adviser

Source: UKAS 360 Wave 3, August 2014


Use of Ratings

Although some use 3rd party ratings as a filtering tool initially, most use it as confirmation and affirmation of their decision. Also, to help sell the product onto their client where possible.

n = 129

2%

2%

4%

3%

2%

2%

34%

29%

22%

19%

16%

14%

9%

3%

0% 5% 10% 15% 20% 25% 30% 35% 40%

Initially to filter a list of funds

My firm uses them to produce our panel list

To filter a list after my initial research

To provide validation of a particular decision

To filter my final selection of fund options

My model portfolio supplier uses them as filter for panel

My platform uses them as a filter to determine the range of fundson offer

Other (please specify)

Discretionary

Top Adviser


If yes, at what stage?

- 24 -Research in Finance¦ Prepared for Morningstar/Morningstar OBSR¦ All rights reserved ¦ PRIVATE AND CONFIDENTIAL - NOT FOR DISTRIBUTION

Other: • Through FE Analytics• Threesixty

Most access ratings as part of their every day research through the software they use.

6%

5%

1%

5%

2%

43%

40%

35%

28%

15%

4%

0% 10% 20% 30% 40% 50% 60%

Software systems

Research providers directly

Platforms

Product providers directly(literature/websites)

Trade media

Other

Discretionary

Top Adviser

n = 129Where do you get the ratings information from?


Factsheets and KIIDs


What information do you talk through with your clients prior to making their investment decisions?


n = 192

Factsheets and performance figures are used extensively by both sectors, with KIID’s documents more popular with IAs.

85%

62%

71%

15%

15%

9%

9%

3%

86%

80%

75%

20%

11%

7%

4%

3%

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

Factsheets

Key Investor Information Documents (KIID)

Performance figures

Supplementary Investor Documents (SID)

Prospectus

Reports/Accounts

Asset Management firm's websites

Third party websites

DFMs IAs


How useful are the following elements on the Key Investor Information Document (KIID)?

- 27 -

Actual


DFMs IAsn = 35

The most useful information on KIIDs are the charges, understanding fund objectives and investment policy.

n = 161

3%

6%

9%

14%

9%

6%

17%

3%

12%

12%

14%

31%

40%

46%

34%

24%

42%

34%

37%

37%

23%

51%

50%

27%

29%

14%

9%

6%

9%

9%

9%

9%

9%

9%

9%

Charges

The fund objectives andinvestment policy

Past performance

Risk and reward

Details of fund and manager'sauthorisation*

Where and how to obtain moreinfo**

The name of the depositaryappointed***

1= Not at all useful 2 3 4=Very useful No opinion/do not use

9%

11%

14%

9%

14%

20%

22%

13%

12%

16%

18%

37%

34%

38%

21%

26%

24%

35%

32%

34%

30%

57%

51%

46%

38%

17%

10%

7%

1%

1%

1%

3%

4%

Charges

The fund objectives andinvestment policy

Risk and reward

Past performance

Where and how to obtain moreinfo**

Details of fund and manager'sauthorisation*

The name of the depositaryappointed***

1= Not at all useful 2 3 4=Very useful No opinion/do not use

* Details of both the fund and fund manager's authorisation (i.e. whether the fund is authorised in the UK or elsewhere in Europe)** Where and how to obtain more detailed information about the fund, such as the fund prospectus and the annual and half-yearly reports*** The name of the depositary appointed to safeguard the fund's assets

3.47

3.29

2.97

2.84

2.63

2.53

2.19

Avg Avg

3.27

3.17

3.03

3.01

2.51

2.35

2.22


Editorial Coverage 2014



RiF Tracker:

Every week the Research in Finance team analyses all of the financial trade press and identifies the key sectors most covered editorially to help spot key trends in the industry. We also monitor whether this coverage is positive, negative or neutral and across all providers.

We have attached a snippet overleaf to show the most covered sectors in the last year. However, if you would like more information or detail about this please contact us.


Editorial coverage : Sept – Nov 2014

The individual sector covered most editorially was UK Equity Income.


The individual sector most advertised during this period was Global Emerging Markets.

Advertising: Sept – Nov 2014 (# of pages across trades)

Contact Us


CONTACT DETAILS

Research in Finance80 Coleman StreetLondonEC2R 5BJ

Toby Finden-Crofts

Founding Director

Tel: 0207 104 2236

Email: [email protected]

Adele Gray

Research Director

Tel: 0207 104 2237


Richard Ley

Founding Director

Tel: 0207 104 2235


Ana Mendes

Senior Market Research Analyst

Tel: 0207 104 2238

