High net worth - positive income portfolio
APPROXIMATE CURRENT ASSET SPLIT
R EAL
This portfolio seeks to produce a reasonable level of appreciation over and
above the rate of inflation. This strategy generally carries a bias towards
equities and other real assets that can vary between 35-80% of the portfolio
value but lower-risk nominal assets are held between 20-65%. This portfolio
strategy is likely to show fluctuations in capital value that could be
significant, particularly in the short to medium term. Where the positive
income strategy is chosen there will be increased bias to income producing
assets
Global equities 55.1%
Property 4.8%
Commodities 0.0%
NOMI NAL
PORTFOLIO GOAL
September 2016
Global fixed income 27.2%
Alternatives 2.4%
Cash 10.4%
CHOOSE THIS PORTFOLIO IF ...
• You are searching for meaningful returns ahead of inflation and you
understand and accept that this strategy carries a bias towards higherrisk assets and you recognise that this may result in the value of your
portfolio fluctuating, possibly significantly, in the short to medium term.
• You are comfortable, given the term for investment and allocations to
other more secure assets, that you can tolerate losses which may be
prolonged in nature.
PORTFOLIO COMPOSITION AND STOCK SELECTION
The directly invested element predominantly comprises a blend of UK
companies characterised by their potential to pay above average levels of
income, with the prospect of dividend growth. Stock selection is
unconstrained with significant exposure to large stable blue chip companies.
However, the also invest in mid- cap business with solid income generation.
To gain exposure to overseas markets the portfolio invests in a selection of
international equity income funds to provide both diversification away from
the UK equity market as well as the prospect of attractive dividend yields.
The collectives element of the portfolio is designed to compliment and
enhance the direct holdings. We search out those managers that have
demonstrated genuine skill by delivering consistently successful results,
rather than those whose long term performance record is the result of just
one or two years of spectacular performance.
For further diversification the portfolio will invest in unitised property funds.
Within the alternative element of the portfolio the portfolio will invest in
vehicles that aim to provide low correlation to other markets as well as the
prospect of stable income.
These weightings are as at 30 September 2016 and are subject to change.
KEY FACTS
Launched
1 March 2014
Risk rating
SPW positive
Minimum investment
£250,000
Estimated gross yield
4.0%
Benchmark
SPW positive composite benchmark (see overleaf)
KEY INFORMATION
Available asset classesA typical high net worth portfolio has 35–45 direct holdings
across fixed income and equities. Collective investment
vehicles are used as complementary holdings to expand
into specialist areas of markets.
Initial chargeSPW does not charge an initial fee. However, if under our
advisory service we recommend retail investment products
as part of your portfolio, an advice charge will apply. This will
be included within your portfolio management and dealing
fees as detailed below and will not be a higher overall fee.
Where applicable you may agree an initial charge with your
investment adviser.
Portfolio management fee
1.0% a year inclusive + VAT
Reporting periods
Half yearly
TOP HOLDINGS:
Direct equities
BP
Glaxo Smith-Klein
Royal Dutch Shell
Unilever
HSBC
AWARDS
RISK PROFILERS
Collectives
Fidelity Global Enhanced Income
Henderson Global Equity Income
Artemis Global Income
John Laing Infrastructure Ltd
Kames Capital Property
fs0061-1016
MARKET REVIEW
Since the UK voted to leave the European Union back in June, the world has been
waiting with bated breath for a glimpse of what the future will hold, but has so far
been rewarded with an information vacuum. With many unanswered questions, most
of which will remain unanswered until well after Article 50 is triggered towards the
end of March 2017, investors remain nervous, so we thought we would take a look at
what we do know about Brexit, and why we stand by our prediction that the future
doesn’t look as bad as the naysayers would have us believe.
In the immediate aftermath of the vote, the consensus view was that the UK economy
would fall back into recession. But many economists and forecasters are now reneging
on their overly cautious views. It’s probably too early to tell, as a recession is defined
as two quarters of negative GDP growth, and we haven’t even finished one quarter
since Brexit. But it is looking less likely. The fall in the value of sterling has proved to
be a significant advantage for the UK’s manufacturing and export-led companies.
Indeed, the seasonally adjusted UK manufacturing purchasing managers index (PMI)
recovered from a 41-month low in August – showing the biggest increase in 25 years,
and the highest reading since October last year. Output and incoming new orders
rebounded sharply, and employment rose for the first time this year.
Initially there were fears of a slowdown in inward-bound investment due to weak
sentiment. In reality, we have seen that the weak pound is a huge incentive for
overseas investment, which offsets the uncertainty. If anything, we have seen a slight
increase in inward-bound cross-border mergers and acquisitions, the continuation of
which is dependent on the outcome of the EU negotiations after triggering Article 50
next year.
A weak pound gives our exporters a sustainable economic advantage, and drives the
prospect of future inflation, which will eventually help to reduce all economic
participants’ debt pile in real terms. At the same time, the UK will be in a position to
benefit from a renewed focus on trade deals with non-EU partners.
RISKS ASSOCIATED WITH INVESTMENT
Investing involves risk and the value of investments and the income from them
may fall as well as rise and are not guaranteed. Investors may not get back the
original amount invested.
The value of fixed interest securities is affected by the risk of default by the issuer and
where an issuer does default you may lose some or all of your capital.
Investments in higher yielding bonds issued by borrowers with lower credit ratings
may result in a greater risk of default and have a negative impact on income and
capital value.
Some portfolios may include investment funds (including property funds and hedge
funds) that use gearing as part of their investment strategy. Such funds may be
subject to sudden and large falls in value, and you may get back nothing on this part
of your portfolio if the fall in value is sufficiently large. Hedge funds can employ a
variety of investment strategies and hence the risks can also vary. In certain
circumstances it may be difficult to liquidate such investments quickly.
Some hedge funds are not regulated by the FCA. Investment in property funds may not
be readily realisable because the underlying property concerned may not be readily
saleable. The value of property is a matter of the valuer’s opinion rather than fact.
The value of investments in overseas securities may rise and fall in sterling terms
purely as a result of exchange rate fluctuations.
Investments in emerging markets are likely to be more volatile and carry more risk
than investments in developed markets.
Investments in smaller companies can be more volatile and less liquid than those in
larger company shares.
Structured investment products carry risk. If the underlying investment or stockmarket
index breaches specified levels, or if the counterparty becomes insolvent, your capital
(and any income) may be lost in whole or in part.
COMPOSITE BENCHMARK
Equity
MSCI World TR Net Index (GBP)
28.75%
Equity
MSCI UK Local TR Net Index (GBP)
28.75%
Property
MSCI World TR Net Real Estate TR Index (GBP)
Commodities
UBS/DJ Commodity TR Index (GBP)
Fixed income
Merrill Lynch Global Bond Hedged Index (GBP)
23.0%
Alternatives
Bank of England base rate + 2.5%
10.0%
Cash
Bank of England base rate
5.0%
2.5%
The asset allocation bands described are for illustrative purposes based on our model
portfolio, and these may alter to take into account changes in markets and SPW’s
views. The actual allocation will depend on client specific circumstances and
requirements. Similarly, the estimated yield is not a targeted yield and is for illustrative
purposes only. The risk rating of the portfolio is in line with SPW’s standard definitions.
Past performance is not a reliable indicator of future results.
2.0%
Real assets
Real assets are investments based on a claim over physical or
tangible underlying assets. Since these assets have substance, they tend to retain their
value after inflation over time. Typical examples of such assets include equities,
property and commodities. Other less commonly used assets in this category, which
we do not include in portfolios, include art, fine wines, vintage cars and antiques.
This fund may include an allocation that invests in our own funds. These are the
Sanlam Private Wealth Global High Quality Fund and the Sanlam Private Wealth
Strategic Investment Grade Bond Fund.
Nominal assets
Nominal assets are defined as investments based on a promise
derived from intangible assets. Since these assets have no substance, they tend not to
retain their value after inflation over time. Typical examples of such assets include
bonds, cash and currencies. In addition, for our purposes we include alternatives
amongst nominal assets, since the objective we seek from them in our clients’
portfolios is a steady return in excess of cash.
CONTACT INFORMATION
Bath - 01225 460010
Kirkby Lonsdale - 015242 72941
Newcastle - 0191 300 9242
Sevenoaks - 01732 740700
Harrogate - 01423 701800
London - 020 7280 8700
Marlow - 01628 473298
Teesside - 01642 931200
E [email protected]
Email: [email protected] I www.sanlam.co.uk I +44 (0) 20 7280 8700
Sanlam Private Wealth is a trading name of Sanlam Private Investments (UK) Ltd which is authorised
and regulated by the Financial Conduct Authority. Registered in England and Wales 2041819.
Registered office: 16 South Park, Sevenoaks, Kent TN13 1AN.
www.sanlam.co.uk
fs0061-1016