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Private Client Research Policy


Charles Stanley & Co. Limited ("Charles Stanley") is committed to servicing its investment clients and the private client investment managers who look after their portfolios with research produced to high quality standards. As a firm authorised and regulated by the Financial Conduct Authority, Charles Stanley is required to act in accordance with the Principles for Business as set out in the Handbook.

These Principles include: conducting our business with integrity (Principle 1) and due skill, care and diligence (Principle 2); paying due regard to the interests of customers and treating them fairly (Principle 6); communicating information to clients in a way that is clear, fair and not misleading (Principle 7); and managing conflicts of interest fairly (Principle 8).

Invariably, all financial services firms will face areas of potential conflicts of interest. The nature of these areas will depend upon the nature of a firm's business model. For Charles Stanley, these conflicts have significantly reduced following the sale of the Group’s corporate finance and brokerage business to Panmure Gordon in July 2015. Charles Stanley is now focused on providing a holistic wealth management service including bespoke investment management, financial planning and model portfolio asset management solutions.

We believe that our Private Client Research analytical outputs are produced to a high quality standard. It is our view that the long term interests of our firm and of all our clients are best provided for by the provision of in-house research on UK equities that is based on rigorous fundamental analysis and drawn from sources which we believe to be reliable.

Our research is published under the name Charles Stanley & Co. Limited.

This policy sets out the systems, controls and procedures by which Charles Stanley produces Private Client Research.

Relevant publications

We consider the following Charles Stanley publications to be the work of Private Client Research:

  • Company Notes on FTSE 350 stocks under coverage by Private Client Research analysts
  • Quarterly Equities Digest (previously known as Investment Handbook)
  • Quarterly Equities Briefing
  • Week in Preview
  • Traders Bulletin

This list may not be comprehensive and may change from time to time without notification, but at all times our research reports will be clearly marked as such. If you are in doubt, please contact our Compliance department at our London head office.

Private Client Research methodologies and definitions of stock recommendations

Fundamental equity analysis methodologies and definitions

Our equity analysis is focused on large and mid-cap (FTSE 350) listed UK equities and based on a rigorous fundamental analysis of the companies covered. This includes analysis of the company’s current operating trends and financial robustness as well as an evaluation of future trading prospects. Analysts formulate a view of the intrinsic value of the stocks they cover using both relative and absolute valuation techniques that are relevant to their sectors.  In arriving at stock recommendations, macroeconomic conditions are also taken into account.

Our stock recommendations (for example 'Outperform') are based on absolute total return expectations for the stock relative to the relevent FTSE350 sector over a specified rolling investment horizon as follows:

Investment horizon: Two years

Outperform         better than 10% expected total absolute return versus the stock's FTSE350 sector

Sector Perform    -10% to +10% expected total absolute return versus the stock's FTSE350 sector

Underperform     worse than -10% expected total absolute return versus the stock's FTSE350 sector

Technical analysis methodologies and definitions

Technical analysis is a method of evaluating securities on the assumption that market data, such as charts of price, volume, and open interest, can help predict future (usually short or medium term) market trends. Unlike fundamental analysis, the intrinsic value of the security is not considered, instead the technical analyst looks at a security's historical prices and other trading variables. Technical analysis assumes that market psychology influences trading in a way that enables predicting when a stock will rise or fall. Technical analysis recommendations may often be contingent, that is to say that an individual recommendation may be conditional upon future price movements occurring. Where this is the case, this fact will be indicated in the research itself.

In this context, a short-term Buy recommendation indicates the potential for an increase in that security price of 5% or more in the near future, whilst a short-term Sell recommendation indicates the potential for an decrease in that security price of 5% or more in the near future.

A medium-term Buy recommendation indicates the potential for an increase in that security price of 10% or more over the next six months, whilst a medium-term Sell recommendation indicates the potential for a decrease in that security price of 10% or more over the next six months.

Management of potential conflicts of interest

Identification of potential conflicts of interest

Senior management regularly review the policies set out below in order to ensure their ongoing effectiveness and appropriateness for the management of potential conflicts of interest in relation to our research reports.

Supervision and management of Private Client Research analysts

Analysts report to the head of Private Client Research. The head of Private Client Research reports to a main board director of Charles Stanley Group plc.

Remuneration of Private Client Research analysts

The remuneration of Private Client Research analysts consists of a salary and a discretionary performance related bonus which is dependent on the overall profitability of Charles Stanley. Under no circumstances is analyst pay linked to the success of individual corporate transactions relating to the companies they cover.

Personal account dealing policy for Private Client Research analysts

Private Client Research analysts can manage their own accounts and they may hold stock in the companies they research, however they are prohibited from dealing against their own research recommendations. They may also hold stock in the companies they research as a result of the decisions of the Investment Manager to whom they have delegated the management of their portfolio, or for historical reasons.

Policy on inducements and editorial influences on research

Charles Stanley does not produce "paid for" research, meaning research paid for directly by a company.

Analysts are not permitted to receive cash gifts from the current, prospective or former companies they cover. Any other gift, favour or entertainment in excess of a certain amount must be reported to a compliance officer and will be disclosed where appropriate.

Traders Bulletin

Traders Bulletin uses technical analysis to seek to predict the future trend of indices, share, currency or commodity prices without taking account of the economic background or individual companies' prospects.

Due to the nature of this form of analysis, the author of Traders Bulletin is responsible for the timing, content and recommendations and therefore this publication does not conform to Charles Stanley's research policy. The methodology used in technical analysis and the meaning of the recommendations made are set out above.

Timing and manner of publication, distribution and communication

Our research reports are disseminated primarily electronically and, in some cases, in printed form.

Disclosure of actual or potential conflicts

Investors should be aware that Charles Stanley might have actual or potential conflicts of interest that could affect the objectivity, independence and impartiality of our research reports. Where such conflicts exist, it is our policy to disclose them publicly, in accordance with Principle 8 of the Principles for Business set out in the FCA Handbook.

General regulatory disclosures

This document is a marketing communication.

This research has not been prepared in accordance with regulatory requirements designed to promote the independence of investment research.

Recommendations are given in good faith but without legal responsibility and are subject to change without notice. The information does not constitute advice or a personal recommendation or take into account the particular investment objectives, financial situations or needs of individual clients. You are recommended to seek advice concerning suitability from your investment adviser. Investors should be aware that past performance is not necessarily a guide to the future and that the price of shares, and the income derived from them, may fall as well as rise and the amount realised may be less than the original sum invested.

Other than disclosures relating to Charles Stanley, this research is based on current public information that we consider reliable, but we do not represent it is accurate or complete and it should not be relied on as such.

Any opinions, forecasts or estimates herein constitute a judgement as at the date of this report. There can be no assurance that future results or events will be consistent with any such opinions, forecasts or estimates. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied is made regarding future performance. This information is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed and it may not contain all material information concerning the company and its subsidiaries. Charles Stanley is not agreeing to nor is it required to update the opinions, forecasts or estimates contained herein.

The value of any securities or financial instruments mentioned in this report can fall as well as rise. Foreign currency denominated securities and financial instruments are subject to fluctuations in exchange rates that may have a positive or adverse effect on the value, price or income of such securities or financial instruments. Certain transactions, including those involving futures, options and other derivative instruments, can give rise to substantial risk and are not suitable for all investors.

Charles Stanley & Co Ltd (or its directors, officers or employees) may, to the extent permitted by law, act upon or use the information or opinions presented herein, or research or analysis on which they are based prior to the material being published.

As a result, investors should be aware that Charles Stanley may have a conflict of interest that could affect the objectivity, independence and impartiality of this report. Investors should consider this report as only a single factor in making their decision. Our policy on managing actual or potential conflicts of interest can be found at: www.charles-stanley.co.uk/PCR-policy

Fundamental equity and technical analysis use different recommendation definitions. These are set out on the above website, as is a summary of the bases of valuation and methodologies used by us to evaluate or set price targets for the subjects of our research.

A list of investment recommendations produced on financial instruments, from the preceding twelve month period, is available upon request free of charge. Please contact us if you would like a copy of this information.

Our Asset Management division and private client investment managers may make investment decisions that are inconsistent with the recommendations or views expressed in this report.

Charles Stanley may have issued other reports that are inconsistent with, and reach different conclusions from, the information presented in this report. Those reports reflect the different assumptions, views and analytical methods of the analysts who prepared them. Prior to publication, a draft of this report may have been provided by Charles Stanley to the subject of the report for factual corrections only.

This report is not an offer to sell or the solicitation of an offer to buy or sell any security in any jurisdiction where such an offer or solicitation would be illegal. This report is not intended for use or distribution for US corporations that do not meet the definition of a major US institutional investor in the United States or for use by any citizen or resident of the United States.

© 2018 All rights reserved. No part of this report may be reproduced or distributed in any manner without the written permission of Charles Stanley & Co. Ltd. Charles Stanley & Co. Ltd. specifically prohibits the re-distribution of this report, via the internet or otherwise, and accepts no liability whatsoever for the actions of third parties in this respect.

Charles Stanley & Co. Ltd is registered in England no. 1903304 Member of the London Stock Exchange Authorised and regulated by the Financial Conduct Authority

February 2018