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Private Clients

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income & capital growth

The objective of all investment is to provide income and capital growth whilst running an agreed amount of risk.

Economic theory argues that capital markets are efficient, meaning that over time they provide investors as a whole with returns directly proportionate to the degree of risk taken. However, this theory applies at the level of market participants as a whole. In practice, the individual investor’s experience can be very different from this average – some will do well and earn much more return than justified by the risks taken, others will do badly and earn much less. The difference between a good and a bad investment experience is a matter of bringing experience and good judgement to bear and marrying that to your circumstances and your particular objectives. This is the partnership we form with you.

Given the element of volatility and unpredictability inherent in investment markets, we believe that investment planning should focus in the first instance on risk control in the context of your particular circumstances. Risk is more foreseeable and manageable than return and insufficiently well-planned risk taking is a near certain route to a bad investment experience.

Against this background, we begin by discussing your circumstances and investment objectives, the risks that can and cannot be taken and the requirements that must be met whatever happens. In particular:

1. What is the minimum level of income or drawings that your portfolio must provide regardless of market conditions?

2. What is the minimum level of cash or readily realisable investments that must be kept in reserve at all times to meet capital spending plans and other contingencies?

3. What is the worst temporary fall in capital value that could be tolerated during the down swing of the inevitable market cycles? How long could you afford, or would you be willing, to wait for eventual recovery?

4. What is the normal currency in which you think and in which you measure progress? To what extent can you tolerate the currency risk that is associated with any international investments in your portfolio?

5. In the case of trusts, pension funds, charitable endowments or other structures, what legal or other requirements must be met at all times, regardless of market conditions?

6. What are the taxes for which you are potentially liable? How can we plan your affairs and your investment strategy in such a way that these can be minimized?

7. What are the third party costs to which you are exposed? How can we plan your affairs and your investment strategy in such a way that these can be minimized?

8. Do you have any particular preferences or likes and dislikes that should be recognised in our investment planning?

9. What will happen to your estate on your death? To what extent should the investment strategy weigh the interests of your estate’s intended beneficiaries?

This discussion provides the basis for agreeing the most suitable investment strategy for you.

Your Circumstances and Investment Objectives

In the context of your circumstances and investment objectives, we agree with you a division of our investment asset universe into three categories: those asset categories which will form the long-term core of your investment portfolio in the context of your asset base as a whole; those which may not have a structural role to play but will be held from time to time opportunistically and those which are not suitable for your portfolio and will be disregarded.

The outcome of this process is a set of agreed long-term planning ranges for the proportion (or 'weighting') of your portfolio that can be held in each asset category at any one time. These weightings are not set in stone or contractual, they are kept under review and can be varied after discussion at any time. Their purpose is to provide a clear, agreed framework for managing your portfolio. They are deliberately set quite wide to permit enough flexibility to respond quickly to anything we judge to be a major change in the investment outlook.

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