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Private Client Research Policy

Introduction

Charles Stanley & Co. Limited ("Charles Stanley") is committed to servicing its private client investment managers who look after clients' portfolios with high quality research. This includes research that is produced in-house as well as that purchased from external providers. As an authorised firm 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. 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 all our clients are best provided for by the provision of in-house research on UK equities which is based on rigorous fundamental analysis and drawn from sources which we believe to be reliable. We do not provide research for external consumption.

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

Centralised Strategy

Charles Stanley provides guidance to Investment Managers via a centralised strategy. This provides asset allocation advice and stock and fund suggestions. The aim is to deliver appropriate investment performance for the risk taken; UK exposure is principally obtained by way of direct equity holdings and it uses funds for International market exposure.

The selection of UK equities is the responsibility of the UK Equity Strategy Committee.

Private Client Research methodologies and definitions of stock recommendations

Our Research Team 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. The team formulate a view of the intrinsic value of the stocks using both relative and absolute valuation techniques that are relevant to the sectors; macroeconomic conditions are also taken into account.

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. This is very much an extra for our Research Team and is usually only used to assist in the timing of a sale or purchase. 

Identification of potential conflicts of interest

Senior management regularly review the policies set out below in order to ensure their on-going 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

The Research Team report to the Chief Investment Officer (CIO), who in turn reports to a main board director of Charles Stanley Group plc.

Remuneration of Private Client Research analysts

The remuneration of the Research Team consists of a salary and a discretionary performance related bonus which is dependent on the overall profitability of Charles Stanley. Under no circumstances is their pay linked to the success of individual corporate transactions relating to the companies covered.

Personal account dealing policy for Private Client Research analysts

Members of the Research Team 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 may 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 or an individual.

Members of the Research Team 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.

Timing and manner of publication, distribution and communication

Our research reports (both those produced in-house and purchased from external providers) are disseminated to Charles Stanley’s Investment Managers, primarily electronically through platforms such as Refinitiv Reuters and Red Deer. All research is distributed in accordance with MiFID II regulations

Disclosure of actual or potential conflicts

Investors should be aware that members of the Charles Stanley Research Team might have actual or potential conflicts of interest that could affect the objectivity, independence and impartiality of their decision making. 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.

© 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

October 2019