STO CKS | FUNDS | I NVESTMENT T RUSTS | P E NS I ONS AND SAVI N GS

SHARES
VOL 20 / ISSUE 36 / 13 SEPTEMBER 2018 / £4.49

WE MAKE INVESTING EASIER

BREXIT

6 MONTHS UNTIL D-DAY

HOW COULD A NO-DEAL IMPACT INVESTORS?

SECOND WORST SEPTEMBER THE INVESTMENT TRUST PAYING

FOR US TECH STOCKS IN 10 YEARS TWICE AS MUCH AS CASH SAVINGS
IS IT TIME FOR WHITBREAD CREATE YOUR OWN SIMPLE
TO SELL PREMIER INN? SHARE PRICE TARGET
 EDITOR’S VIEW
Are you brave enough to
sell an investment when
circumstances change?
It is a good discipline to continuously reappraise your holdings
O
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evidence in hand and not
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investment case.
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2 | SHARES | 13 September 2018
ĞdžŝƚĞĚĂŌĞƌŽŵŝŶŽ͛ƐĚŝƐĂƉƉŽŝŶƚĞĚǁŝƚŚ
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ǀƨėőƅĝƨǮŲ /ĝÇÖIJĝƨǮ¿ /ĝÇÖIJĝƨǮ =ńƨÖƅńŠƨĝőńŠIJ¿ ƨėÖ /ĝÇÖIJĝƨǮ =ńƨÖƅńŠƨĝőńŠIJ IJőĉő ŠńÇ / ƍǮĽ©őIJ ŠƅÖ ƨƅŠÇÖĽŠƅįƍ őï /=I IĝĽĝƨÖÇŲ sGOǷÝŚÝơƹƹƭƕƭơhhVơŚŚŚÝ
Contents VIEWING
SHARES AS
A PDF?
CLICK ON PAGE
NUMBERS TO JUMP
TO THE START OF
THE RELEVANT
SECTION
EDITOR’S Are you brave enough to sell an investment
02 VIEW when circumstances change?

Setback for US tech stocks / Calls for Whitbread to sell Premier Inn /
BIG
06 NEWS Unilever’s FTSE 100 future / Fundraise fear for Sirius Minerals /
Is Debenhams at death’s door?

GREAT New: Worldpay / Sopheon

12 IDEAS Updates: Melrose Industries / Team17 / JD Sports / Ideagen

MAIN
20 FEATURE Brexit: six months to D-Day

MONEY What does a no-deal Brexit mean for your pensions

26 MATTERS and personal spending?

INVESTMENT City of London: 4.4% yield offers twice the return

29 TRUSTS of best-buy cash accounts

32 FUNDS Could financial funds benefit as interest rates rise?

36 AEQUITAS Why September is an important month for Japan (if not the world)

TALKING Understanding liquidity and why it matters to buying and selling

38 POINT investments

40 EDUCATION Create your own simple share price target

UNDER THE
42 BONNET Amigo distances itself from Wonga in a bid to gain investor interest

45 INDEX Shares, funds, investment trusts and ETFs in this issue

securities, derivatives or positions with spread betting organisations that they

DISCLAIMER
IMPORTANT
Shares publishes information and ideas which are of interest to investors. It
does not provide advice in relation to investments or any other financial matters.
Comments published in Shares must not be relied upon by readers when they
make their investment decisions. Investors who require advice should consult a
properly qualified independent adviser. Shares, its staff and AJ Bell Media Limited
do not, under any circumstances, accept liability for losses suffered by readers as
a result of their investment decisions.
Members of staff of Shares may hold shares in companies mentioned in the
magazine. This could create a conflict of interests. Where such a conflict exists it
will be disclosed. Shares adheres to a strict code of conduct for reporters, as
set out below.
1. In keeping with the existing practice, reporters who intend to write about any
have an interest in should first clear their writing with the editor. If the editor
agrees that the reporter can write about the interest, it should be disclosed to
Index of companies and funds in this issue
readers at the end of the story. Holdings by third parties including families, trusts,
self-select pension funds, self select ISAs and PEPs and nominee accounts are
included in such interests.
2. Reporters will inform the editor on any occasion that they transact shares,
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of this register should be revealed to the editor.
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mentions such interest. Reporters who have an interest in a company they have
written about should not transact the shares within seven working days after the
on-sale date of the magazine.

4 | SHARES | 13 September 2018

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 BIG NEWS

Second worst September

start for US tech stocks in
10 years
The Nasdaq index is struggling amid political intervention and profit taking

A s we write the US technology-heavy

Nasdaq index is enduring its second worst
September start since 2008. Only 2011 had
a worse showing.
A decade ago makes for a notable point of
dƌƵƐƚ;^DdͿ is down 5.5% and WŽůĂƌĂƉŝƚĂů
dĞĐŚŶŽůŽŐLJdƌƵƐƚ;WdͿ is down 3.9%. (TS)

dKWϭϬ^hZ/d/^zt/',d
Apple 7.98%
comparison given that on 15 September 2008 Amazon 7.23%
investment bank Lehman Brothers collapsed.
With more than $639bn worth of its assets it DŝĐƌŽƐŽŌ 6.64%
was the largest bankruptcy in US corporate Facebook 4.09%
history and arguably represented the zenith of the ůƉŚĂďĞƚůĂƐƐ 3.41%
ĮŶĂŶĐŝĂůĐƌŝƐŝƐ͘ ůƉŚĂďĞƚůĂƐƐ 2.98%
EŽͲŽŶĞŝƐƐƵŐŐĞƐƟŶŐǁĞĂƌĞŚĞĂĚŝŶŐĨŽƌĂŶLJƚŚŝŶŐ
Intel 2.03%
similar in 2018 but given the technology sector has
been a big driver in the bull market of recent years ŝƐĐŽ^LJƐƚĞŵƐ 1.77%
it is worth looking at what lies behind Nasdaq’s EĞƞůŝdž 1.49%
recent weakness. WĞƉƐŝĐŽ 1.35%
/ƚĐŽƵůĚƐŝŵƉůLJďĞĂďŝƚŽĨŶĂƚƵƌĂůƉƌŽĮƚƚĂŬŝŶŐ͘/Ŷ Source: Nasdaq
ƚŚĞůĂƐƚĮǀĞLJĞĂƌƐĂůŽŶĞ͕ƚŚĞŝŶĚĞdžŚĂƐŵŽƌĞƚŚĂŶ
doubled in value as the so-called FAANG stocks 8200 NASDAQ COMPOSITE

;&ĂĐĞŬ͕ŵĂnjŽŶ͕ƉƉůĞ͕EĞƞůŝdžĂŶĚ'ŽŽŐůĞ
(Alphabet)) have soared.
8100
Simmering away in the background is an ongoing
ĞīŽƌƚďLJh^ůĂǁŵĂŬĞƌƐƚŽƐĐƌƵƟŶŝƐĞĨŽƌĞŝŐŶ
ĂƩĞŵƉƚƐƚŽƵƐĞƐŽĐŝĂůŵĞĚŝĂƚŽŝŶŇƵĞŶĐĞƚŚĞ 8000
ŽƵƚĐŽŵĞŽĨĞůĞĐƟŽŶƐ͘džĞĐƵƟǀĞƐĨƌŽŵ&ĂĐĞŬ
ĂŶĚdǁŝƩĞƌďŽƚŚĂƉƉĞĂƌĞĚďĞĨŽƌĞ^ĞŶĂƚŽƌƐ
although Google-owner Alphabet failed to show. 7900
AUG SEP
dŚĞŝŶĚĞdžǁĞĂŬŶĞƐƐĐŽƵůĚĂůƐŽƌĞŇĞĐƚƚŚĞ
ůĂƚĞƐƚŝŶƚĞƌǀĞŶƟŽŶďLJWƌĞƐŝĚĞŶƚŽŶĂůĚdƌƵŵƉ͘
He tweeted on 8 September that if Apple wanted
ƚŽĂǀŽŝĚƚĂƌŝīƐŽŶŚŝŶĞƐĞŐŽŽĚƐŝƚƐŚŽƵůĚ E^Y/EEhd^,>>
manufacture its products in the US. &ŽƵŶĚĞĚŝŶϭϵϳϭ͕EĂƐĚĂƋŝƐƚŚĞƐĞĐŽŶĚůĂƌŐĞƐƚ
ĂŶŬŽĨŵĞƌŝĐĂDĞƌƌŝůů>LJŶĐŚĞƐƟŵĂƚĞƐƉƉůĞ stock exchange in the world by total market
ǁŽƵůĚŚĂǀĞƚŽŝŶĐƌĞĂƐĞƚŚĞƉƌŝĐĞŽĨƚŚĞŝWŚŽŶĞďLJ ĐĂƉŝƚĂůŝƐĂƟŽŶďĞŚŝŶĚƚŚĞEĞǁzŽƌŬ^ƚŽĐŬdžĐŚĂŶŐĞ͘
ϮϬйƚŽŽīƐĞƚƚŚĞŝŵƉůŝĞĚŝŶĐƌĞĂƐĞŝŶůĂďŽƵƌĐŽƐƚƐ ƩƌĂĐƟŶŐŐƌŽǁƚŚĐŽŵƉĂŶŝĞƐůŝŬĞDŝĐƌŽƐŽŌĂŶĚ
if it were to take Trump up on his advice. ƉƉůĞƐŝŶĐĞƚŚĞϭϵϴϬƐ͕ŝƚŝƐŶŽǁƐŝŐŶŝĮĐĂŶƚůLJ
UK investment trusts with exposure to the weighted towards the technology sector.
&E'ƐŚĂǀĞďĞĞŶŚŝƚďLJƚŚĞƚĞĐŚƐĞůůͲŽī͘^ŝŶĐĞƚŚĞ
start of September ^ĐŽƫƐŚDŽƌƚŐĂŐĞ/ŶǀĞƐƚŵĞŶƚ

6 | SHARES | 13 September 2018

 BIG NEWS
BIG NEWS

Is this the beginning of the

end for Whitbread?
One analyst argues Premier Inn should not be a standalone company

S ƉĞĐƵůĂƟŽŶŚĂƐďĞĞŶďƌĞǁŝŶŐŽǀĞƌǁŚĂƚǁŝůů
happen to tŚŝƚďƌĞĂĚ;tdͿ following the
ĂŐƌĞĞĚƐĂůĞŽĨŽƐƚĂŽīĞĞƚŽŽĐĂͲŽůĂĨŽƌ
£3.9bn.
ŽĐĂͲŽůĂŝƐďƵLJŝŶŐŽƐƚĂƚŽĚĞǀĞůŽƉƚŚĞĐŽīĞĞ
chain and make cold-brew and ready-to-drink
ĐŽīĞĞƉƌŽĚƵĐƚƐƵŶĚĞƌĂƐƚƌŽŶŐŐůŽďĂůďƌĂŶĚ͘
ĂŶĂĐĐŽƌĚ'ĞŶƵŝƚLJĂŶĂůLJƐƚEŝŐĞůWĂƌƐŽŶďĞůŝĞǀĞƐ
ƚŚŝƐƉŽƚĞŶƟĂůůLJƐŝŐŶĂůƐ͚ƚŚĞďĞŐŝŶŶŝŶŐŽĨƚŚĞĞŶĚ͛
ĨŽƌtŚŝƚďƌĞĂĚ͕ĐůĂŝŵŝŶŐŝƚƐŽƚŚĞƌĐŽƌĞďƌĂŶĚ͕ŚŽƚĞů
ĐŚĂŝŶWƌĞŵŝĞƌ/ŶŶ͕ƐŚŽƵůĚŶŽƚĞdžŝƐƚŝŶŝƐŽůĂƟŽŶĂŶĚ
should be taken over by rivals.
WĂƌƐŽŶĂƌŐƵĞƐĐŽŵƉĞƟƚŽƌƐƐƵĐŚĂƐ,ŽůŝĚĂLJ
Inn-owner /ŶƚĞƌŽŶƟŶĞŶƚĂů,ŽƚĞůƐ;/,'Ϳ͕DĂƌƌŝŽƩ
and Accor could work with a property investor to
ƐƉůŝƚƚŚĞƉƌŽƉĞƌƚLJĨƌŽŵŝƚƐŽƉĞƌĂƟŽŶƐ͘
tŝƚŚŽƵƚŽƐƚĂ͕tŚŝƚďƌĞĂĚǁŽƵůĚŽǁŶWƌĞŵŝĞƌ Nigel Parson claims that Premier Inn should be taken over by rivals

/ŶŶ͕ĂůŽŶŐǁŝƚŚƉƵďĂŶĚƌĞƐƚĂƵƌĂŶƚĐŚĂŝŶƐƌĞǁĞƌƐ
&ĂLJƌĞ͕ĞĞĨĞĂƚĞƌ͕ĂƌнůŽĐŬ͕dĂďůĞdĂďůĞ͕ĂŶĚ
in-house restaurant Thyme.
Whitbread is expected to use the proceeds from
ƐĞůůŝŶŐŽƐƚĂƚŽƌĞƚƵƌŶĐĂƐŚƚŽƐŚĂƌĞŚŽůĚĞƌƐ͕ĐƵƚ
debt and boost the pension fund.
EƵŵŝƐĂŶĂůLJƐƚdŝŵĂƌƌĂƩŶŽƚĞƐWƌĞŵŝĞƌ/ŶŶŝƐ
ŐĂŝŶŝŶŐƉŽƐŝƟǀĞŵŽŵĞŶƚƵŵǁŝƚŚƚƌĂĚŝŶŐŝŵƉƌŽǀŝŶŐ
in London.
͚tĞĞdžƉĞĐƚƚŚĞƉŽƚĞŶƟĂůĨŽƌĨƵƌƚŚĞƌĐŽƌƉŽƌĂƚĞ
ĂĐƟǀŝƚLJƚŽƵŶĚĞƌƉŝŶĂƉƌĞŵŝƵŵǀĂůƵĂƟŽŶĨŽƌƚŚĞ
ŚŽƚĞůďƵƐŝŶĞƐƐ͕͛ĐŽŵŵĞŶƚƐĂƌƌĂƩ͘;>D:Ϳ

Are UK markets finally ready to shed their

Brexit discount?
State Street study is encouraging but UK is still weak versus other global markets

d,/ZYhZdZ 2018
survey shows 21% of
ŝŶƐƟƚƵƟŽŶƐĂƌĞƚŚŝŶŬŝŶŐĂďŽƵƚ
ŝŶĐƌĞĂƐŝŶŐƐƚĂŬĞƐŝŶh<ĂƐƐĞƚƐ͕
up from 13% in the second
ƋƵĂƌƚĞƌ͕ĂĐĐŽƌĚŝŶŐƚŽ^ƚĂƚĞ
^ƚƌĞĞƚ͘dŚĞĞƋƵŝǀĂůĞŶƚĮŐƵƌĞ
was 16% for the third quarter
ŽĨϮϬϭϳ͕ƐƵŐŐĞƐƟŶŐŝŶǀĞƐƚŽƌƐŝŶ
increasing numbers are willing
to bat back Brexit worries.
,ŽǁĞǀĞƌ͕ƚŚŝƐƐƟůůŝŵƉůŝĞƐ
ďĂƌĞůLJĂĮŌŚŽĨŝŶƐƟƚƵƟŽŶƐ
ĂƌĞĐŽŶĮĚĞŶƚĞŶŽƵŐŚŝŶ
UK economic prospects to
increase exposure.
͚dŚĞƐƚŽƌLJŽĨƌĞdžŝƚƐŽĨĂƌ
is that fears of economic
ĚŝƐƌƵƉƟŽŶĂŶĚĐĂƉŝƚĂůŇŝŐŚƚ
have been unfounded and
investors have been willing to
ŐŝǀĞƚŚĞh<ƚŚĞďĞŶĞĮƚƚŚĞ
ĚŽƵďƚ͕͛ƐĂLJƐDŝĐŚĂĞůDĞƚĐĂůĨĞ͕
head of global macro strategy
at State Street Global Markets.
dŚĞh<͛Ɛ&d^ůů^ŚĂƌĞŝŶĚĞdž
has underperformed several
ůĞĂĚŝŶŐŐůŽďĂůŝŶĚŝĐĞƐƚŚŝƐLJĞĂƌ͕
ŝŶĐůƵĚŝŶŐďŽƚŚƚŚĞ^ΘWϱϬϬ
ĂŶĚƚŚĞD^/tŽƌůĚ/ŶĚĞdž͘;^&Ϳ

13 September 2018 | SHARES | 7

 BIG NEWS

Will Unilever exit the

FTSE 100?
Consumer goods giant details plans for cancelling dual-share structure and
moving HQ

 ŽŶƐƵŵĞƌŐŽŽĚƐŐŝĂŶƚĂŶĚĐƵƌƌĞŶƚ&d^ϭϬϬ
ĐŽŶƐƟƚƵĞŶƚhŶŝůĞǀĞƌ;h>sZͿ is poised for
a crucial shareholder vote on moving its
headquarters to the Netherlands.
On 11 September the company published the
ĨƵůůĚĞƚĂŝůƐŽĨĂƉůĂŶƚŽƐĐƌĂƉŝƚƐĚƵĂůh<ͲƵƚĐŚƐƚŽĐŬ
ŵĂƌŬĞƚůŝƐƟŶŐĂŶĚŵĂŬĞƚŚĞŵŽǀĞƚŽZŽƩĞƌĚĂŵ͕
ŚĂǀŝŶŐĮƌƐƚŽƵƚůŝŶĞĚƚŚĞƉƌŽƉŽƐĂůƐŝŶDĂƌĐŚ͘
dŚĞƟŵŝŶŐŽĨƚŚĞŵŽǀĞŚĂƐƐĞĞŶŵĂŶLJŽďƐĞƌǀĞƌƐ
link it to Brexit although Unilever itself argues it is a
ůŽŶŐͲŶĞĞĚĞĚƐŝŵƉůŝĮĐĂƟŽŶŽĨŝƚƐĐŽƌƉŽƌĂƚĞƐƚƌƵĐƚƵƌĞ͘ Could we see the owner of Marmite move its headquarters to the Netherlands?

ƐƐƵŵŝŶŐƚŚĞƉůĂŶƐĂƌĞĂƉƉƌŽǀĞĚĂƚŵĞĞƟŶŐƐŽŶ Unilever shares as the company is widely expected

25 October and 26 October then the new shares will
ĐŽŵŵĞŶĐĞƚƌĂĚŝŶŐŽŶŚƌŝƐƚŵĂƐǀĞ͘/ƚǁŝůůŚĂǀĞƚŽ
ƌĞĐĞŝǀĞϱϬйĂƉƉƌŽǀĂůĨƌŽŵŝƚƐƵƚĐŚƐŚĂƌĞŚŽůĚĞƌƐ
and 75% approval from its UK shareholders.
DĂŶLJŝŶƐƟƚƵƟŽŶĂůŝŶǀĞƐƚŽƌƐŚĂǀĞĐŽŵƉůĂŝŶĞĚ
about the move as they will be forced to sell their
ƚŽůŽƐĞŝƚƐƉůĂĐĞŝŶƚŚĞ&d^ŝŶĚĞdž͘
In its prospectus for the new shares Unilever
ĐŽŶĐĞĚĞƐŝƚŝƐ͚ĞdžƚƌĞŵĞůLJƵŶůŝŬĞůLJ͛ƚŚĞLJǁŝůůďĞ
ĂůůŽǁĞĚƚŽƌĞŵĂŝŶŝŶƚŚĞ&d^͘
At present the company is the third largest by
market cap on the UK’s index of leading shares. (TS)

Investors braced for potential dilutive equity

fundraise from Sirius Minerals
Miner needs to find a solution to a large funding shortfall

/Es^dKZ^Z very worried higher costs from its transport ƐŚŽƌƞĂůůŝƐŶĞǁƐƚŚĂƚƚŚĞƚĂƌŐĞƚ

about the price at which ^ŝƌŝƵƐ
DŝŶĞƌĂůƐ;^yyͿcould issue new
shares to address a funding
ƐŚŽƌƞĂůůĨŽƌŝƚƐƉŽůLJŚĂůŝƚĞŵŝŶĞ
ĚĞǀĞůŽƉŵĞŶƚŝŶzŽƌŬƐŚŝƌĞ͘
EĞĂƌůLJĂĮŌŚŽĨƚŚĞĐŽŵƉĂŶLJ͛Ɛ
ŵĂƌŬĞƚǀĂůƵĞŚĂƐďĞĞŶǁŝƉĞĚŽī
ŝŶƚŚĞƉĂƐƚǁĞĞŬĂŌĞƌƚŚĞ&d^
250 miner updated on its capital
requirements.
Sirius says it now needs an
ĂĚĚŝƟŽŶĂůΨϰϬϬŵƚŽΨϲϬϬŵ
which is mainly connected to
system tunnel. It can either
get the money by issuing new
stock to investors and/or a
new strategic partner. Or it can
turn to debt or a third party to
ĮŶĂŶĐĞĂŶLJĐŽƐƚŽǀĞƌƌƵŶƐ͘
The market now appears
ƚŽĂŶƟĐŝƉĂƚĞĂƐŚĂƌĞͲďĂƐĞĚ
ĨƵŶĚƌĂŝƐŝŶŐĂƌŽƵŶĚƚŚĞϮϲƉůĞǀĞů͕
being the point at which the
ƐŚĂƌĞƉƌŝĐĞŚĂƐƐĞƩůĞĚĨŽůůŽǁŝŶŐ
last week’s shock decline.
ŽŝŶĐŝĚŝŶŐǁŝƚŚƚŚĞĨƵŶĚŝŶŐ
ĨŽƌĮŶĂŶĐŝĂůĐůŽƐĞŽĨŝƚƐΨϯďŶ
ƐƚĂŐĞϮĮŶĂŶĐŝŶŐŚĂƐďĞĞŶ
ƉƵƐŚĞĚďĂĐŬĨƌŽŵĞĐĞŵďĞƌ
ƚŚŝƐLJĞĂƌƚŽƚŚĞĮƌƐƚƋƵĂƌƚĞƌŽĨ
2019.
tĞŇĂŐŐĞĚƌŝƐŬƐƚŽƚŚĞ
ŝŶǀĞƐƚŵĞŶƚĐĂƐĞŝŶŽƵƌ:ƵůLJ
Under The Bonnet ĂƌƟĐůĞŽŶ
^ŝƌŝƵƐ͕ƐĂLJŝŶŐƚŚĂƚŝŶǀĞƐƚŽƌƐŵƵƐƚ
ƌĞĐŽŐŶŝƐĞƚŚĂƚƐĞĐƵƌŝŶŐĮŶĂŶĐŝŶŐ
ǁŽƵůĚŶŽƚďĞƐƚƌĂŝŐŚƞŽƌǁĂƌĚʹ
and that is clearly proving to be
ƚŚĞĐĂƐĞ͘;Ϳ

8 | SHARES | 13 September 2018

 SCOTTISH MORTGAGE INVESTMENT TRUST

SCOTTISH MORTGAGE
ENTERED THE
FTSE 100 INDEX IN
MARCH 2017.

WANTED. DREAMERS, VISIONARIES

AND REVOLUTIONARIES.
=PZPVUHY`LU[YLWYLUL\YZVќLYVWWVY[\UP[PLZMVYNYLH[^LHS[OJYLH[PVU;OLScottish Mortgage Investment Trust
HJ[P]LS`ZLLRZ[OLTV\[

6\YWVY[MVSPVJVUZPZ[ZVMHYV\UKVM^OH[^LILSPL]LHYL[OLTVZ[L_JP[PUNJVTWHUPLZPU[OL^VYSK[VKH`6\Y]PZPVU
PZSVUN[LYTHUK^LPU]LZ[^P[OUVSPTP[ZVUNLVNYHWOPJHSVYZLJ[VYL_WVZ\YL

6\Y[YHJRYLJVYKHZSVUN[LYTZ\WWVY[P]LZOHYLOVSKLYZTHRLZ\ZH[[YHJ[P]L[VHUL^IYLLKVMJHWP[HSSPNO[I\ZPULZZLZ
(UKV\YJVTTP[[LKHWWYVHJOTLHUZ^LJHULUQV`HIL[[LYX\HSP[`VMKPHSVN\L^P[OTHUHNLTLU[[LHTZH[[YHUZMVYTH[PVUHS
VYNHUPZH[PVUZ6]LY[OLSHZ[Ä]L`LHYZ[OLScottish Mortgage Investment TrustOHZKLSP]LYLKH[V[HSYL[\YUVM
JVTWHYLK[VMVY[OLZLJ[VY(UK:JV[[PZO4VY[NHNLPZSV^JVZ[^P[OHUVUNVPUNJOHYNLZÄN\YLVMQ\Z[†

:[HUKHYKPZLKWHZ[WLYMVYTHUJL[V1\UL

2014 2015 2016 2017 2018

Scottish Mortgage 28.9% 25.8% 4.9% 48.8% 33.4%

AIC Global Sector Average 15.8% 15.4% 3.5% 32.4% 17.8%

7HZ[WLYMVYTHUJLPZUV[HN\PKL[VM\[\YLYL[\YUZ
7SLHZLYLTLTILY[OH[JOHUNPUNZ[VJRTHYRL[JVUKP[PVUZHUKJ\YYLUJ`
L_JOHUNLYH[LZ^PSSHќLJ[[OL]HS\LVM[OLPU]LZ[TLU[PU[OLM\UKHUK
HU`PUJVTLMYVTP[0U]LZ[VYZTH`UV[NL[IHJR[OLHTV\U[PU]LZ[LK
-VYHMHYZPNO[LKHWWYVHJOJHSS0800 917 2112
VY]PZP[\ZH[www.scottishmortgageit.com
(2L`0UMVYTH[PVU+VJ\TLU[PZH]HPSHISLI`JVU[HJ[PUN\Z Long-term investment partners

*Source: Morningstar, share price, total return as at 30.06.18. †Ongoing charges as at 31.03.18. Your call may be recorded for training or monitoring
purposes.Scottish Mortgage Investment Trust PLC is available through the Baillie Gifford Investment Trust Share Plan and the Investment Trust
ISA, which are managed by Baillie Gifford Savings Management Limited (BGSM). BGSM is an affiliate of Baillie Gifford & Co Limited, which is the
manager and secretary of Scottish Mortgage Investment Trust PLC.
 BIG NEWS

Share price decline

implies Debenhams is
at death’s door
Will the fading retailer survive to see Christmas?

A iling department store ĞďĞŶŚĂŵƐ͛;Ϳ

shares plunged to fresh lows on media reports
ŝƚŚĂĚĐĂůůĞĚŝŶĂĐĐŽƵŶƚĂŶƚ<WD'ƚŽĐŽŶƐŝĚĞƌ
ŝƚƐŽƉƟŽŶƐ͕ĂƐƚŚĞĐŚŝůůǁŝŶĚďůŽǁŝŶŐƚŚƌŽƵŐŚƚŚĞŚŝŐŚ
ƐƚƌĞĞƚƚŚƌĞĂƚĞŶƐƚŽĐůĂŝŵĂŶŽƚŚĞƌǀŝĐƟŵ͘
ƐĐĂůĞƵƉƐŽŵĞŽĨŽƵƌƐƚƌĂƚĞŐŝĐĂĐƟǀŝƚLJ͛͘
zĞƚWĂƚƌŝĐŬK͛ƌŝĞŶ͕h<ƌĞƚĂŝůƌĞƐĞĂƌĐŚĚŝƌĞĐƚŽƌ
Ăƚ'ůŽďĂůĂƚĂ͕ŝƐƐĐĂƚŚŝŶŐ͚͗tŚŝůĞŝƚǁŽƵůĚƐĞĞŵ
ƚŽŽĞĂƌůLJƚŽƚƌLJƚŽĨŽŝƐƚĂsŽŶůĂŶĚůŽƌĚƐǁŚŽ
are already seething at what they deem to be an
dŚĞĨĞĂƌŝƐƚŚĞĚĞĐŝƐŝŽŶƚŽďƌŝŶŐŝŶ<WD'ŝƐĂ ŝŶŚĞƌĞŶƚůLJƵŶĨĂŝƌƉƌŽĐĞƐƐďĞŝŶŐĂďƵƐĞĚďLJƌĞƚĂŝůĞƌƐ͕
ƉƌĞůƵĚĞƚŽĂĐŽŵƉĂŶLJǀŽůƵŶƚĂƌLJĂƌƌĂŶŐĞŵĞŶƚ;sͿ ĞďĞŶŚĂŵƐĂƉƉĞĂƌƐƚŽďĞƐŽŌĞŶŝŶŐƚŚĞŵƵƉĨŽƌ
or perhaps worse. ƐŽŵĞĨŽƌŵŽĨŶĞŐŽƟĂƟŽŶ͘
ĞďĞŶŚĂŵƐ͛ƌĞƐƉŽŶƐĞ;ϭϬ^ĞƉͿĨĂŝůĞĚƚŽĂĚĚƌĞƐƐ ͚ĞďĞŶŚĂŵƐŵĂLJƐƟůůďĞƉƌŽĮƚĂďůĞĂŶĚŚĂƐƚŚĞ
investors’ key concern. possibility of bringing in £200m-plus from the sale
ŚĂŝƌŵĂŶ/ĂŶŚĞƐŚŝƌĞƐĂLJƐ͚͗dŚĞďŽĂƌĚĐŽŶƟŶƵĞƐ ŽĨDĂŐĂƐŝŶĚƵEŽƌĚ͕ďƵƚŝƚƐůŽŶŐƚĞƌŵƉĞƌĨŽƌŵĂŶĐĞ
ƚŽǁŽƌŬǁŝƚŚŝƚƐĂĚǀŝƐĞƌƐŽŶůŽŶŐĞƌƚĞƌŵŽƉƟŽŶƐ͕ ŝƐƐƟůůŐŽŝŶŐƚŽďĞƵŶĚĞƌŚƵŐĞƉƌĞƐƐƵƌĞ͕ĂŶĚǁŝƚŚ
which include strengthening our balance sheet and ŝƚĐĂƌƌLJŝŶŐάϰ͘ϲďŶŽĨůĞĂƐĞĐŽŵŵŝƚŵĞŶƚƐ͕ďŽƚŚŝƚ
ƌĞǀŝĞǁŝŶŐŶŽŶͲĐŽƌĞĂƐƐĞƚƐ͘dŚŝƐĂĐƟǀŝƚLJŝƐŝŶŽƌĚĞƌƚŽ and its landlords know that these will need to be
maximise value for shareholders and protect other addressed soon unless there is a marked upturn in
ƐƚĂŬĞŚŽůĚĞƌƐ͕ŝŶĐůƵĚŝŶŐŽƵƌĞŵƉůŽLJĞĞƐ͛͘ ƚŚĞĨŽƌƚƵŶĞƐŽĨƚŚĞh<ŚŝŐŚƐƚƌĞĞƚ͛͘;:Ϳ
^ƚƌƵĐƚƵƌĂůůLJͲĐŚĂůůĞŶŐĞĚĞďĞŶŚĂŵƐŚĂƐŝƐƐƵĞĚĂ
ƐĞƌŝĞƐŽĨƉƌŽĮƚǁĂƌŶŝŶŐƐĂŵŝĚƌŝƐŝŶŐĐŽƐƚƐ͕ƐƋƵĞĞnjĞĚ hEZ>z/E'ZE/E'^WZ^,ZΈWΉ
ĚŝƐƉŽƐĂďůĞŝŶĐŽŵĞƐ͕ŚĞĂǀLJĚŝƐĐŽƵŶƟŶŐĂŶĚĐŚĂŶŐŝŶŐ ϮϬϭϱ ϮϬϭϲ ϮϬϭϳ
ƐŚŽƉƉŝŶŐŚĂďŝƚƐ͕ǁŚŝůĞƌŝǀĂů,ŽƵƐĞŽĨ&ƌĂƐĞƌůƵƌĐŚĞĚ
ŝŶƚŽĂĚŵŝŶŝƐƚƌĂƟŽŶŽǀĞƌƚŚĞƐƵŵŵĞƌ͘
dŚĞůĂƩĞƌǁĂƐĂĐƋƵŝƌĞĚďLJDŝŬĞƐŚůĞLJ͛Ɛ^ƉŽƌƚƐ
ŝƌĞĐƚ;^WͿ͕ǁŚŽƐĞŶĞĂƌͲϯϬйĞďĞŶŚĂŵƐƐƚĂŬĞ
ŝŵƉůŝĞƐƚŚĞƉŽƐƐŝďŝůŝƚLJŽĨĂĐŽƌƉŽƌĂƚĞƟĞͲƵƉ͖
ĐŽŵďŝŶŝŶŐ,ŽƵƐĞŽĨ&ƌĂƐĞƌĂŶĚĞďĞŶŚĂŵƐǁŽƵůĚ
cut costs and create the opportunity to rethink the 7.6 7.5 6.4
ŵĞƌŐĞĚĞŶƟƚLJ͛ƐƐƚƌĂƚĞŐŝĐĚŝƌĞĐƟŽŶ͘ ZdhZEKEW/d>DW>KzΈйΉ
ĞďĞŶŚĂŵƐŶŽǁĞdžƉĞĐƚƐƚŽƌĞƉŽƌƚƉƌĞͲƚĂdž ϮϬϭϱ ϮϬϭϲ ϮϬϭϳ
ƉƌŽĮƚďĞĨŽƌĞŽŶĞͲŽīŝƚĞŵƐĨŽƌĨƵůůLJĞĂƌϮϬϭϴŽĨ
ĂƌŽƵŶĚάϯϯŵ͕ǁŝƚŚŝŶƚŚĞƌĂŶŐĞŽĨƚŚĞάϯϭŵͲƚŽͲ
άϯϲ͘ϱŵĐŽŵƉĂŶLJͲĐŽŵƉŝůĞĚĐŽŶƐĞŶƐƵƐ͕LJĞƚŝŶĨĂĐƚ
a downgrade on the £35m-to-£40m guidance
ƉƌŽǀŝĚĞĚďLJƚŚĞƌĞƚĂŝůĞƌŝŶ:ƵŶĞ͘
With the early weeks of the new season having
ƐŚŽǁŶŵŽƌĞƉŽƐŝƟǀĞƚƌĞŶĚƐ͕ĞďĞŶŚĂŵƐďĞůŝĞǀĞƐ
͚ĂŶLJƐƵƐƚĂŝŶĞĚƵƉƚƵƌŶǁŽƵůĚƌĞƐƵůƚŝŶĂƌĞďŽƵŶĚ
ŝŶŽƵƌƉƌŽĮƚƉĞƌĨŽƌŵĂŶĐĞ͛ĂŶĚK^ĞƌŐŝŽƵĐŚĞƌ
ŝŶƐŝƐƚƐ͚ƚŚĞƉƌŽĚƵĐƚĂŶĚĨŽƌŵĂƚŝŵƉƌŽǀĞŵĞŶƚƐǁĞ 12.2 11.8 11.1
ŚĂǀĞƚĞƐƚĞĚĂƌĞŐĂŝŶŝŶŐƚƌĂĐƟŽŶĂŶĚǁĞĂƌĞƌĞĂĚLJƚŽ Source: Shares, Debenhams’ annual report & accounts 2017

10 | SHARES | 13 September 2018

Miton Global Opportunities plc
ADVERTORIAL

Bargain hunting in the investment Seeking embedded value

trust sector in alternative areas

ver the past 3 years, Miton Global Opportunities (MIGO) has returned 78% by exploiting inefficiencies in the RISKS
O closed-ended sector. Looking forward, we are continuing to see structural shifts throwing up interesting and
exciting opportunities, where we are able to buy £1 worth of assets on occasions for as little as 70p. Closed-
Forecasts are not
reliable indicators of
ended funds (generically known as Investment Trusts) are bought and sold on the stock market. This means that future returns.
the price that an investor pays can differ dramatically from the value of the underlying assets, often at a discount. The value of
investments can fall
Discrete Performance as well as rise and
investors may not get
30/06/2017 30/06/2016 30/06/2015 30/06/2014 30/06/2013 back the full amount
to 30/06/2018 to 30/06/2017 to 30/06/2016 to 30/06/2015 to 30/06/2014 invested.

Currency exchange
Miton Global Opportunities Plc 14.4% 49.6% 4.2% 3.7% 10.4%
rate fluctuations may,
when not hedged,
IT Flexible Investment Sector 3.4% 22.1% 2.5% 5.4% 3.4% cause the value of your
investments to increase
Past performance is not a guide to future returns. Source: FE Analytics as at 30/06/2018 Retail units in Sterling, net income reinvested, bid to bid basis.
or decrease.
Historically, the dominant traditional owners of investment to generate much faster earnings growth than available in Miton Global
trusts have been private client stockbrokers buying on behalf developed markets. Opportunities plc
of their clients. The rapid consolidation of these broking may borrow money
Vietnam is also at an exciting stage of its development. which can then be
firms into a handful of major wealth management chains has
Like India, the demographics are very favourable in used to make further
effectively removed the traditional buyer of many investment
comparison to those in the West with 57% of the population investments (gearing).
trusts. This is because it is difficult to acquire sufficient shares In a rising market, this
under the age of 35. In the past few years, Vietnam has been
to complete orders given the vast assets these firms now ‘gearing’ can magnify
moving from mainly state-owned enterprises to privately
manage. This evaporation of demand has created an ideal the gains or losses on
owned. The country has also positioned itself as an exporter
hunting ground for MIGO. your investment.
to neighbouring countries such as China, triggering strong
The nature of MIGO’s portfolio dictates that returns have come economic growth which we anticipate continuing in the
in fits and starts. Sometimes there are significant moves once coming years. DEFINITIONS
some of our investments are noticed by the wider world.
We have also added to Phoenix Spree Deutschland and 1
Bond – A loan in the
At other times it feels like we are watching paint dry as our
Macau Property Opportunities Fund. We remain extremely form of a security, either
holdings remain below the radar. The portfolio has seen little
bullish about the outlook for residential property in Berlin. issued by a UK or
movement in recent months. Nevertheless, value has been
Apartments remain cheap in comparison to most major overseas government
building and the seeds of our next run are in place. (government bonds) or
European cities and the population of Germany’s capital
company (corporate
The rise in both the US dollar and US interest rates has continues to grow at a time when new supply is muted.
bonds), which pays a
applied pressure on emerging market company shares and Macau Property Opportunities trades on a significant discount fixed rate of interest over
bonds1. Many investors trade this asset class as a block, despite the trust entering its realisation phase where the a given time period, at
therefore, they fail to differentiate between the fundamentals assets are being sold and cash being handed back to the end of which the
of specific markets. Should a retail investor watch a negative shareholders. The imminent opening of the Hong Kong to initial amount borrowed
report on events in Turkey or Argentina, they are most likely to Macau bridge will stimulate the local economy driving property is repaid.
sell a generic emerging markets exchange-traded fund2. When prices higher creating a perfect sellers’ market. 2
Exchange Traded
they do this, they will also be dumping shares from countries Fund (ETF) – An
We have also bought Stenprop, which moved to London in
that are at an interesting stage of their development, such as exchange traded fund
June. Prior to obtaining its London listing its shares could still is a fund that tracks an
India and Vietnam, where we are seeing opportunities arise as
be bought in Johannesburg at a 20% discount despite offering index, a commodity or a
these markets have declined.
an attractive yield4. It is refocusing its portfolio on UK mixed basket of assets like an
Falling portfolio values combined with a widening discount light industrial properties which are located in unfashionable index fund. Most ETFs
is a powerful combination which quickly throws up value locations such as Mytholmroyd and Huddersfield. Supply is track an index, such as
the FTSE All-Share.
opportunities. We have been adding to our positions in contracting as urban sites are converted to housing whilst
3
Vietnam Opportunities Fund and India Capital Growth demand increases. A greater proportion of business is Discount/premium
Fund. At the time of writing these trade on discounts to the being conducted over the internet, which has removed the to share price – The
discount/premium
share price3 of 23% and 16% respectively. India Capital requirement for many businesses to locate so many of their
to share price is the
Growth Fund was trading on a 6% discount earlier this year operations close to their customers, allowing them to rent difference between the
highlighting how the share price has fallen much further than cheaper provincial space. share price and the
the underlying assets. underlying value of an
The diverse nature of the underlying investments means
investment trust.
We believe that a significant proportion of market concerns that MIGO is little correlated to wider markets. We find good
4
are already priced into these investment trusts. Their potential assets trading at a discount where we see a catalyst for the Yield – The income
is being overlooked. India has entered a period of structural value to be realised. Over the past six months we have been return on an investment.
Fund yields are a
change reducing the endemic bureaucracy and corruption uncovering and adding to trusts where conditions are ripe
measure of income
which has blighted the economy. This process will benefit for a narrowing of the discount to occur. We will now wait to earned by the fund’s
the formal sector allowing listed companies to take an unlock the hidden value. portfolio, net of the fund’s
ever-larger share of growth. This will enable Indian equities expenses.

IMPORTANT INFORMATION
Any mention of a specific stock is not a recommendation to buy or sell. The views expressed are those of the fund manager at the time of writing and are subject to change without notice. They are not necessarily
the views of Miton and do not constitute investment advice. Miton has used all reasonable efforts to ensure the accuracy of the information contained in the communication, however some information and statistical
data has been obtained from external sources. Whilst Miton believes these sources to be reliable, Miton cannot guarantee the reliability, completeness or accuracy of the content or provide a warrantee. Investors
should read the Trust’s product documentation before investing including, the PRIIPs Key Information Document (KID), the latest Annual Report and Accounts and the Alternative Investment Fund Managers Directive
(AIFMD) Disclosure Document as they contain important information regarding the trust, including charges, tax and specific risk warnings and will form the basis of any investment. This financial promotion is issued
by Miton, a trading name of Miton Trust Managers Limited. Miton Trust Managers Limited is authorised and regulated by the Financial Conduct Authority and is registered in England No. 220241 with its registered
office at 6th Floor, Paternoster House, 65 St Paul’s Churchyard, London, EC4M 8AB. MFP 18/263
 GREAT IDEAS

Shares in gigantic payments

group Worldpay are cheap
versus its growth prospects
The benefits of its multi-billion dollar tie-up with Vantiv are now starting to be realised

W e think the earnings

ƉŽƚĞŶƟĂůĨŽƌƉĂLJŵĞŶƚ
ƉƌŽĐĞƐƐŝŶŐĮƌŵ
Worldpay (WPY) is not being
ĨƵůůLJƌĞĐŽŐŶŝƐĞĚďLJƚŚĞŵĂƌŬĞƚ
ĂŶĚƌĞĐŬŽŶŶŽǁŝƐĂŐŽŽĚƟŵĞ
ƚŽďƵLJƚŚĞƐƚŽĐŬĂƐŝƚƌĞĂƉƐ
ƚŚĞďĞŶĞĮƚƐĨƌŽŵŝƚƐΨϭϬďŶ
ĐŽŵďŝŶĂƟŽŶǁŝƚŚsĂŶƟǀŝŶ
ĞĂƌůLJϮϬϭϴ͘
ƚƌĂĚĞͲŽīĨƌŽŵƚŚĂƚĚĞĂůǁĂƐ
ƚŚĂƚƚŚĞĐŽŵďŝŶĞĚĞŶƟƚLJĞŶĚĞĚ
ƵƉŚĂǀŝŶŐŝƚƐŵĂŝŶƐƚŽĐŬŵĂƌŬĞƚ
ůŝƐƟŶŐŝŶEĞǁzŽƌŬ͘ĞƐƉŝƚĞ
ƌĞƚĂŝŶŝŶŐĂŶĂĚĚŝƟŽŶĂůůŝƐƟŶŐŝŶ
>ŽŶĚŽŶŝƚŶŽůŽŶŐĞƌƋƵĂůŝĮĞƐĨŽƌ
ƚŚĞ&d^ϭϬϬŝŶĚĞdž͘dŚĂƚ͛ƐŶŽ
reason to ignore the stock as
LJŽƵĐĂŶƐƟůůĨƌĞĞůLJďƵLJĂŶĚƐĞůů
ŝƚŽŶƚŚĞ>ŽŶĚŽŶŵĂƌŬĞƚ͘
WHAT DOES IT DO?
tŽƌůĚƉĂLJƉƌŽĐĞƐƐĞƐŵŽƌĞƚŚĂŶ
ϰϬďŶƉĂLJŵĞŶƚƚƌĂŶƐĂĐƟŽŶƐĂ
LJĞĂƌĂĐƌŽƐƐϭϰϲĐŽƵŶƚƌŝĞƐĂŶĚ
ϭϮϲĐƵƌƌĞŶĐŝĞƐ͘
/ƚŵĂŬĞƐŵŽŶĞLJďLJĐŽůůĞĐƟŶŐ
ĨĞĞƐŽŶƚŚĞƐĞƚƌĂŶƐĂĐƟŽŶƐ͘/ƚ
ĂůƐŽŐĞŶĞƌĂƚĞƐĂŶŝŶĐŽŵĞďLJ
ĂĚǀŝƐŝŶŐĐƵƐƚŽŵĞƌƐŽŶŚŽǁƚŽ
WORLDPAY FACTS AND FIGURES
Earnings per share
KƉĞƌĂƟŶŐŵĂƌŐŝŶ
Net debt
^ŽƵƌĐĞ͗ĞƌĞŶďĞƌŐ
WORLDPAY È BUY
(WPY) £74.42
Stop loss: £59.54
Market value: £23.2bn
ůŽǁĞƌĐŽƐƚƐƚŽĐƌĞĚŝƚŝƐƐƵĞƌƐ͕ ŐƵŝĚĂŶĐĞŽŶĐŽƐƚƐLJŶĞƌŐŝĞƐ
ĐĂƌĚŶĞƚǁŽƌŬƐĂŶĚŽƚŚĞƌ ĨƌŽŵƚŚĞsĂŶƟǀƟĞͲƵƉĨƌŽŵ
ŝŶƚĞƌŵĞĚŝĂƌŝĞƐ͕ďLJƐĞƩůŝŶŐƚŚĞƐĞ ΨϰϱŵƚŽΨϱϬŵ͘
ƚƌĂŶƐĂĐƟŽŶƐŝŶĂĐƵƌƌĞŶĐLJŽĨ ƐǁĞůůĂƐƚŚĞĐŽƐƚƐĂǀŝŶŐƐ
ƚŚĞŝƌĐŚŽŝĐĞĂƐǁĞůůĂƐŽīĞƌŝŶŐ ĨƌŽŵĂƐƉĞĐƚƐůŝŬĞĐŽŵďŝŶŝŶŐ
ƐƵďƐĐƌŝƉƟŽŶͲďĂƐĞĚĚĂƚĂŝŶƐŝŐŚƚƐ ďĂĐŬŽĸĐĞĨƵŶĐƟŽŶƐ͕ŵĞƌŐĞƌƐ
ĂŶĚĨƌĂƵĚƐŽůƵƟŽŶƐ͘ ĂŶĚĂĐƋƵŝƐŝƟŽŶƐĐĂŶĂůƐŽĚĞůŝǀĞƌ
ƐĂůĞĂĚĞƌŝŶĞͲĐŽŵŵĞƌĐĞ ƐŽͲĐĂůůĞĚƌĞǀĞŶƵĞƐLJŶĞƌŐŝĞƐ
ƉĂLJŵĞŶƚƐ͕ƚŚĞĐŽŵƉĂŶLJŝƐǁĞůů ĨƌŽŵŝŶŝƟĂƟǀĞƐůŝŬĞĐƌŽƐƐͲƐĞůůŝŶŐ
ƉŽƐŝƟŽŶĞĚƚŽďĞŶĞĮƚĨƌŽŵƚŚĞ ƉƌŽĚƵĐƚƐĂŶĚƐĞƌǀŝĐĞƐ͘
ĐŽŶƟŶƵŝŶŐŐƌŽǁƚŚŽĨŽŶůŝŶĞ &ŽƌƚŚĞĮƌƐƚƟŵĞtŽƌůĚƉĂLJ
ƐŚŽƉƉŝŶŐĂĐƌŽƐƐƚŚĞŐůŽďĞ͘ ƉƵƚĂŶƵŵďĞƌŽŶƚŚĞůĂƩĞƌ͕
ƚĂƌŐĞƟŶŐΨϭϬϬŵďLJϮϬϮϬ͘dŚŝƐ
UPGRADED GUIDANCE ĂĚĚƐƵƉƚŽƚŽƚĂůƐLJŶĞƌŐŝĞƐŽĨ
ůŽŶŐƐŝĚĞĮƌƐƚŚĂůĨƌĞƐƵůƚƐŽŶ ΨϮϬϬŵďLJƚŚŝƐĚĂƚĞ͘
ϵƵŐƵƐƚtŽƌůĚƉĂLJƵƉŐƌĂĚĞĚ KŌĞŶǁŚĞŶĂĐŽŵƉĂŶLJƚĂůŬƐ
ĂďŽƵƚƚŚĞƐLJŶĞƌŐŝĞƐĨƌŽŵĂ
ďŝŐŵĞƌŐĞƌ͕ƚŚĞLJĐĂŶĨĞĞůƋƵŝƚĞ
ŝŶƚĂŶŐŝďůĞĂŶĚƚŚĞƌĞĐĂŶďĞĂ
2018E 2019E 2020E ƐƵƐƉŝĐŝŽŶƚŚĞŶƵŵďĞƌƐŚĂǀĞ
ϯ͘ϵϵĐĞŶƚƐ ϰ͘ϴϳĐĞŶƚƐ ϲ͘ϬϳĐĞŶƚƐ ďĞĞŶŵĂƐƐĂŐĞĚƚŽŚĞůƉũƵƐƟĨLJ
ϰϰ͘Ϯй ϰϳ͘ϴй ϱϬй ƚŚĞŵŽŶĞLJĂŶĚƟŵĞƉƵƚŝŶƚŽĂ
Ψϳ͘ϰϴďŶ Ψϲ͘ϰϴďŶ Ψϱ͘ϯϵďŶ ďŝŐƚƌĂŶƐĂĐƟŽŶ͘
,ŽǁĞǀĞƌ͕ƚŚĞƌĞŝƐƐŽůŝĚůŽŐŝĐ
ďĞŚŝŶĚƚŚĞĂƌŐƵŵĞŶƚƚŚĂƚ

12 | SHARES | 13 September 2018


tŽƌůĚƉĂLJĂŶĚsĂŶƟǀŵĂŬĞĂŐŽŽĚ
ĮƚĂŶĚƌĞĂƐŽŶƚŽďĞůŝĞǀĞƚŚĂƚ͕ŝĨ
ĂŶLJƚŚŝŶŐ͕ƚŚĞƚĂƌŐĞƚĞĚƐLJŶĞƌŐŝĞƐ
ĂƌĞĐŽŶƐĞƌǀĂƟǀĞ͘/ŶĚĞĞĚ͕
ŝŶǀĞƐƚŵĞŶƚďĂŶŬĞƌĞŶďĞƌŐƐĞĞƐ
ƐLJŶĞƌŐŝĞƐŽĨΨϮϴϬŵďLJϮϬϮϬ͘
HOW DO THE COMPANIES
SIT TOGETHER?
sĂŶƟǀǁĂƐƚŚĞŶƵŵďĞƌŽŶĞ
ŵĞƌĐŚĂŶƚĂĐƋƵŝƌĞƌŝŶƚŚĞ
h^͕ƐƉĞĐŝĂůŝƐŝŶŐŝŶƚŚĞƌĞƚĂŝů͕
ƌĞƐƚĂƵƌĂŶƚ͕ŐƌŽĐĞƌLJĂŶĚĚƌƵŐ
ƐĞĐƚŽƌƐ͕ĂŶĚďƵƐŝŶĞƐƐͲƚŽͲďƵƐŝŶĞƐƐ
ŵĂƌŬĞƚƐ͘tŽƌůĚƉĂLJƐƉĞĐŝĂůŝƐĞĚŝŶ
ĚŝŐŝƚĂůƐĞƌǀŝĐĞƐ͕ƚŚĞƚƌĂǀĞůƐĞĐƚŽƌ
ĂŶĚŽŶůŝŶĞƌĞƚĂŝů͕ĂŶĚǁĂƐƚŚĞ
ŶƵŵďĞƌŽŶĞŵĞƌĐŚĂŶƚĂĐƋƵŝƌĞƌ
ŝŶƚŚĞh<͘
EĞŝƚŚĞƌŽĨƚŚĞƚǁŽƉĂƌƟĞƐ
ŚĂĚŵƵĐŚŽĨĂƉƌĞƐĞŶĐĞŽŶƚŚĞ
ŽƉƉŽƐŝƚĞƐŝĚĞŽĨƚŚĞƚůĂŶƟĐ͕
ŵĞĂŶŝŶŐůŝƩůĞŐĞŽŐƌĂƉŚŝĐ
ĐƌŽƐƐŽǀĞƌ͘
dŚĞĞŶůĂƌŐĞĚďƵƐŝŶĞƐƐƌĞĐĞŶƚůLJ
ƐĞĐƵƌĞĚŝƚƐĮƌƐƚƚǁŽũŽŝŶƚĐƌŽƐƐͲƐĞůů
ĐŽŶƚƌĂĐƚǁŝŶƐǁŝƚŚ͚ůĂƌŐĞĂŶĚ
ǁĞůůͲŬŶŽǁŶĚŝŐŝƚĂůƉůĂLJĞƌƐ͕͛
ƐŚŽǁŝŶŐŚŽǁĐŽŵďŝŶŝŶŐ
ĨŽƌĐĞƐŚĂƐĂůƌĞĂĚLJůĞĚƚŽ
ĮŶĂŶĐŝĂůƐƵĐĐĞƐƐ͘
͚ͲĐŽŵŵĞƌĐĞŝƐĂΨϯ
ƚƌŝůůŝŽŶŝŶĚƵƐƚƌLJǁŝƚŚǀŽůƵŵĞ
ŐƌŽǁŝŶŐŵŝĚͲƚĞĞŶƐŽǀĞƌĂůů
ĂŶĚϮϱйŝŶĐƌŽƐƐͲďŽƌĚĞƌ
ĞͲĐŽŵŵĞƌĐĞ͕͛ƐĂLJƐ
tŽƌůĚƉĂLJ͛ƐĐŚĂŝƌŵĂŶ
ŚĂƌůĞƐƌƵĐŬĞƌ͚͘tĞĂƌĞ
ƚŚĞůĂƌŐĞƐƚƉůĂLJĞƌŝŶŐůŽďĂů
ĞͲĐŽŵŵĞƌĐĞ͕ƚĂƌŐĞƟŶŐƚŚĞ
ĨĂƐƚĞƐƚͲŐƌŽǁŝŶŐĂƌĞĂŽĨƚŚĞ
ŵĂƌŬĞƚ͕ŝŶĐůƵĚŝŶŐŐůŽďĂů
ďƌĂŶĚƐĂŶĚůĂƌŐĞĚŝŐŝƚĂů
ŶĂƟǀĞƐ͘dŚŝƐĂůůŽǁƐƵƐ
ƚŽŐƌŽǁĨĂƐƚĞƌƚŚĂŶƚŚĞ
ŵĂƌŬĞƚ͕ĞǀĞŶƚŚŽƵŐŚǁĞĂƌĞ
ĂůƌĞĂĚLJĂůĞĂĚŝŶŐƉůĂLJĞƌ͘
͚ƐƐƉĞŶĚŝŶŐĐŽŶƟŶƵĞƐƚŽ
ŵŽǀĞŽŶůŝŶĞ͕ŽƵƌŽƉƉŽƌƚƵŶŝƚLJ
ĐŽŶƟŶƵĞƐƚŽŐƌŽǁĂƐƚŚĞŵĂƌŬĞƚ
ĂĚĚƐĂƉƉƌŽdžŝŵĂƚĞůLJΨϯϬϬďŝůůŝŽŶ
GREAT IDEAS
Global e-commerce payments is a $3Tr market, growing in mid-teens...
North America Europe
China
$0.6Tn $0.5Tn
$1.4Tn
Rest of World
$0.4Tn
Source: Worldpay, eMarketer, McKinsey & Company
than $300B in addressable
ŽĨŶĞǁŐƌŽǁƚŚĂŶŶƵĂůůLJ͛͘ ͚dŚĞW^ZǁŝůůůŝŬĞůLJĐŽŶĚƵĐƚŝƚƐ
ŵĂƌŬĞƚƌĞǀŝĞǁŝŶϮϬϭϵĨŽůůŽǁŝŶŐ
A RISK TO CONSIDER ĂĐŽŶƐƵůƚĂƟŽŶƉĞƌŝŽĚƚŚĂƚ
KŶĞŝƐƐƵĞƚŽŶŽƚĞŝƐƚŚĞh< ĞŶĚƐŝŶ^ĞƉƚĞŵďĞƌŽĨƚŚŝƐLJĞĂƌ͘
WĂLJŵĞŶƚ^LJƐƚĞŵƐZĞŐƵůĂƚŽƌ͛Ɛ dŚĞƌĞĨŽƌĞ͕ǁŚŝůĞŝƚŝƐŝŵƉŽƐƐŝďůĞ
ƉƌŽƉŽƐĂůƚŽĐŽŶĚƵĐƚĂŵĂƌŬĞƚ ƚŽƉƌĞĚŝĐƚƚŚĞŽƵƚĐŽŵĞŽĨƚŚĞ
ƌĞǀŝĞǁŝŶƚŽƚŚĞƐƵƉƉůLJŽĨĐĂƌĚ ƌĞǀŝĞǁ͕ǁĞĚŽŶŽƚĐƵƌƌĞŶƚůLJ
ĂĐƋƵŝƌŝŶŐƐĞƌǀŝĐĞƐ͘/ƚǁĂŶƚƐƚŽƐĞĞ ĞdžƉĞĐƚĂŶĞĂƌͲƚĞƌŵŝŵƉĂĐƚ͛͘
ŝĨďĂŶŬƐĂŶĚƉĂLJŵĞŶƚƐƉĞĐŝĂůŝƐƚƐ
ŚĂǀĞƚĂŬĞŶĂĚǀĂŶƚĂŐĞŽĨĂůĂĐŬ OUR VIEW ON THE
ŽĨĐŽŵƉĞƟƟŽŶƚŽŽǀĞƌĐŚĂƌŐĞ INVESTMENT CASE
ƐŵĂůůĞƌďƵƐŝŶĞƐƐĞƐĂŶĚ tŚŝůĞƚŚĂƚŝƐĐĞƌƚĂŝŶůLJĂŶŝƐƐƵĞ
ƉƌĞǀĞŶƚƚŚĞŵĨƌŽŵ ƚŽŵŽŶŝƚŽƌ͕ǁĞƌĞŵĂŝŶďƵůůŝƐŚŽŶ
ŵŽǀŝŶŐƚŽĂůƚĞƌŶĂƟǀĞ tŽƌůĚƉĂLJ͛ƐŝŶǀĞƐƚŵĞŶƚĐĂƐĞĂŶĚ
ƐĞƌǀŝĐĞƉƌŽǀŝĚĞƌƐ͘ ĐĞƌƚĂŝŶůLJďĞůŝĞǀĞŝƚƐƐŚĂƌĞƐĂƌĞ
tŽƌůĚƉĂLJŝƐĂŵŽŶŐ ǁŽƌƚŚďƵLJŝŶŐ͘
ĂƉƉƌŽdžŝŵĂƚĞůLJϯϬĐĂƌĚͲ ƉƌŝĐĞͲƚŽͲĞĂƌŶŝŶŐƐƚŽŐƌŽǁƚŚ
ĂĐƋƵŝƌĞƌƐǁŚŝĐŚĚŽŵŝŶĂƚĞ ŽƌW'ƌĂƟŽŝƐĂŐŽŽĚǁĂLJ
ƚŚĞh<ŵĂƌŬĞƚŝŶĐůƵĚŝŶŐ ŽĨǀĂůƵŝŶŐƚŚĞďƵƐŝŶĞƐƐĂŶĚ
ĂƌĐůĂLJĐĂƌĚĂŶĚ>ůŽLJĚƐ tŽƌůĚƉĂLJŝƐǀĞƌLJĂƩƌĂĐƟǀĞŽŶ
ĂŶŬĂƌĚŶĞƚ͘tŽƌůĚƉĂLJ͛Ɛ ƚŚŝƐďĂƐŝƐ͘/ƚƚƌĂĚĞƐŽŶĂϮϬϭϵ
h<ďƵƐŝŶĞƐƐĐŽŶƚƌŝďƵƚĞƐ W'ƌĂƟŽŽĨϬ͘ϵͲƟŵĞƐďĂƐĞĚŽŶ
ϭϱйŽĨƚŽƚĂůĐŽŵƉĂŶLJŶĞƚ ĨŽƌĞĐĂƐƚƐĨƌŽŵĞƌĞŶďĞƌŐʹĂ
ƌĞǀĞŶƵĞǁŝƚŚŝƚƐh<ƐŵĂůůͲƚŽͲ ĮŐƵƌĞďĞůŽǁϭ͘ϬŝƐĐŽŶƐŝĚĞƌĞĚ
ŵĞĚŝƵŵďƵƐŝŶĞƐƐĂĐƋƵŝƌŝŶŐ ŐŽŽĚǀĂůƵĞ͘;d^Ϳ
ƉŽƌƞŽůŝŽĐŽŶƚƌŝďƵƟŶŐ
ĂƉƉƌŽdžŝŵĂƚĞůLJϱйŽĨƚŽƚĂů 8000
WORLDPAY
ĐŽŵƉĂŶLJŶĞƚƌĞǀĞŶƵĞ͘
͚tĞďĞůŝĞǀĞƚŚĞ 7500
ŵĞƌĐŚĂŶƚĂĐƋƵŝƌŝŶŐŵĂƌŬĞƚ 7000
ŝƐĐŽŵƉĞƟƟǀĞĂƐĞǀŝĚĞŶĐĞĚďLJ 6500
ƌĞĐĞŶƚŶĞǁĞŶƚƌĂŶƚƐĂŶĚŝŶĚƵƐƚƌLJ 6000
^DĐŚƵƌŶƌĂƚĞƐĂǀĞƌĂŐŝŶŐϭϱй 5500
ƚŽϮϱй͕͛ŝŶƐŝƐƚƐ^ƚĞƉŚĂŶŝĞ&ĞƌƌŝƐ͕ 5000
tŽƌůĚƉĂLJ͛ƐĐŚŝĞĨĮŶĂŶĐŝĂůŽĸĐĞƌ͘ FEB APR JUN AUG
13 September 2017 | SHARES | 13
 GREAT IDEAS
Keep buying Sopheon as
its share price rally
has further to run
Expanding markets and more predictable revenue
should take the stock higher
S ŽŵĞƌĞĂĚĞƌƐǁŝůůƌĞŵĞŵďĞƌ
ƚŚĞŶĂŵĞSopheon
(SPE:AIM)ƐŝŶĐĞǁĞŚĂǀĞ
ƵƉĚĂƚĞĚŵĂŶLJƟŵĞƐŽŶŽƵƌ
ƉƌĞǀŝŽƵƐGreat IdeaĨƌŽŵϮ:ƵŶĞ
ϮϬϭϳĂƚϯϯϬƉ͘tĞĂĐƚƵĂůůLJĮƌƐƚ
ŇĂŐŐĞĚƚŚĞĐŽŵƉĂŶLJŝŶƵŐƵƐƚ
ϮϬϭϲĂƚϮϬϮƉ͘
dŚĞƐŚĂƌĞƐŚĂǀĞďĞĞŶŽŶĂ
ƌĂŵƉĂŶƚƌƵŶ͕ŶƵĚŐŝŶŐĂďŽǀĞ
άϭϬ͘ϬϬƚǁŝĐĞƚŚŝƐLJĞĂƌ͘tĞƐƟůů
ƚŚŝŶŬƚŚĞƌĞŝƐǀĞƌLJĚĞĐĞŶƚƵƉƐŝĚĞ
ĨƌŽŵĐƵƌƌĞŶƚůĞǀĞůƐ͘ĞĨŽƌĞǁĞ
ĞdžƉůĂŝŶŽƵƌƌĞĂƐŽŶƐ͕ŝƚ͛ƐĮƌƐƚ
ŝŵƉŽƌƚĂŶƚƚŽƵŶĚĞƌƐƚĂŶĚǁŚĂƚ
^ŽƉŚĞŽŶĚŽĞƐ͘
dŚĞ^ƵƌƌĞLJͲďĂƐĞĚƐŽŌǁĂƌĞ
ĐŽŵƉĂŶLJŚĞůƉƐƐƚƌĞĂŵůŝŶĞƚŚĞ
ƌĞƐĞĂƌĐŚĂŶĚĚĞǀĞůŽƉŵĞŶƚ
ƉƌŽĐĞƐƐĨŽƌĐůŝĞŶƚƐĂŶĚƉƌŽǀŝĚĞƐ
ƉƌŽĚƵĐƚůŝĨĞĐLJĐůĞŵĂŶĂŐĞŵĞŶƚ
ƚŽŽůƐ͘&ƌŽŵĞĂƌůLJƌŽŽƚƐĂƐĂ
ƉƌŽǀŝĚĞƌŽĨƉƌŽĐĞƐƐĂƵƚŽŵĂƟŽŶ
ƚŽŽůƐ͕ŝƚŚĂƐĞŵĞƌŐĞĚĂƐĂŶ
ŝŶŶŽǀĂƟŽŶŵĂŶĂŐĞŵĞŶƚƐŽůƵƟŽŶ
ƚŽĐŽŵƉůĞdžŵĂŶƵĨĂĐƚƵƌĞƌƐ͘
^ŽƉŚĞŽŶŚĂƐŵŽƌĞƚŚĂŶ
ϲϬ͕ϬϬϬƵƐĞƌƐĂĐƌŽƐƐϱϬͲƉůƵƐ
ĐŽƵŶƚƌŝĞƐǁŽƌůĚǁŝĚĞ͕ĨĞĂƚƵƌŝŶŐ
ƚŚĞůŝŬĞƐŽĨE^͕DĞƌĐŬĂŶĚ
^&͘/ƚƐĐĐŽůĂĚĞƉůĂƞŽƌŵŝƐ
ƵƐĞĚŽŶŝŶŶŽǀĂƟŽŶƉƌŽũĞĐƚƐ
ǁŽƌƚŚĂŶĞƐƟŵĂƚĞĚάϮϱďŶ͘
ŶĂůLJƐƚƐĂƚƐƚŽĐŬďƌŽŬĞƌ&ŝŶŶĂƉ
ĐĂůĐƵůĂƚĞĂĨĂŝƌǀĂůƵĞŽǀĞƌƚŚĞŶĞdžƚ
LJĞĂƌŽƌƐŽŽĨƌŽƵŐŚůLJάϭϯ͘ϬϬ͕ĂŶĚ
ŚĞƌĞ͛ƐǁŚLJǁĞĂŐƌĞĞ͘
14 | SHARES | 13 September 2018
XXXX È BUY
SOPHEON
(xxx)
È BUY
(SPE:AIM)
xxxp 930p
Stop loss: 651p
xxp
Market value: £97m
xxx
EXPANDING AND MORE
PREDICTABLE
^ŽƉŚĞŽŶŝƐƐƵĐĐĞƐƐĨƵůůLJ
ĞdžƉĂŶĚŝŶŐďĞLJŽŶĚŝƚƐƚƌĂĚŝƟŽŶĂů
ŝŶĚƵƐƚƌŝĂůĞŶŐŝŶĞĞƌŝŶŐͲƚLJƉĞ
ƐƉĂĐĞ͘ƌĞĂƐůŝŬĞĐŽŶƐƵŵĞƌ
ŐŽŽĚƐ͕ĨŽŽĚĂŶĚĚƌŝŶŬ͕ĂŶĚ
ƚĞĐŚŶŽůŽŐLJĚĞǀĞůŽƉŵĞŶƚĂƌĞ
ƉƌŽǀŝŶŐƚŽďĞƵƐĞĨƵůŶĞǁŐƌŽǁƚŚ
ĂƌĞĂƐ͕ǁŚŝůĞƚŚĞĐŽŵƉĂŶLJŝƐ
ĂůƐŽĐůŽƐŝŶŐǁĂƚĐŚŝŶŐŝŶƐƵƌĂŶĐĞ͕
ĂƵƚŽŵŽƟǀĞĂŶĚŽƚŚĞƌŝŶĚƵƐƚƌŝĞƐ͘
ŝƚďLJďŝƚ^ŽƉŚĞŽŶ͛ƐƌĞǀĞŶƵĞƐ
ĂƌĞďĞĐŽŵŝŶŐŵŽƌĞƉƌĞĚŝĐƚĂďůĞ͘
,ĂůĨLJĞĂƌƚŽϯϬ:ƵŶĞϮϬϭϴĮŐƵƌĞƐ
ƌĞǀĞĂůƌĞĐƵƌƌŝŶŐƌĞǀĞŶƵĞŐƌĞǁ
ƚŽΨϭϯ͘ϳŵĨƌŽŵΨϭϬ͘ϱŵĂLJĞĂƌ
ĞĂƌůŝĞƌ͘ZĞĐƵƌƌŝŶŐƌĞǀĞŶƵĞ
ŚĂƐƌŽƵŐŚůLJĚŽƵďůĞĚŝŶĂďŽƵƚ
ƚŚƌĞĞLJĞĂƌƐ͘
KŶĐĞLJŽƵĨĂĐƚŽƌŝŶĐŽŶƚƌĂĐƚĞĚ
ŵĂŝŶƚĞŶĂŶĐĞŝŶĐŽŵĞĨƌŽŵ
ŵƵůƟͲLJĞĂƌůŝĐĞŶĐĞƐ͕ΨϮϳ͘ϮŵŽĨ
ƚŚĞĐƵƌƌĞŶƚĨƵůůLJĞĂƌ͛ƐΨϯϭŵ
ĨŽƌĞĐĂƐƚƌĞǀĞŶƵĞŝƐĞīĞĐƟǀĞůLJŝŶ
ƚŚĞďĂŐ͕ĂŶĚƚŚĂƚ͛ƐďĞĨŽƌĞƚŚĞ
ƚLJƉŝĐĂůůLJďƵƐLJĨŽƵƌƚŚƋƵĂƌƚĞƌ
ĨŽƌŶĞǁůŝĐĞŶĐĞƐĂůĞƐ͘
&ŝŶŶĂƉƐƵŐŐĞƐƚƐĐƵƌƌĞŶƚ
ĞĂƌŶŝŶŐƐĞdžƉĞĐƚĂƟŽŶƐĂƌĞ
ƉŝƚĐŚĞĚĐŽŶƐĞƌǀĂƟǀĞůLJ͘dŚĂƚ
ŵĞĂŶƐƚŚĞƌĞŝƐŽŶŐŽŝŶŐ
ƉŽƚĞŶƟĂůĨŽƌŐƵŝĚĂŶĐĞƵƉŐƌĂĚĞƐ͕
ƐŽŵĞƚŚŝŶŐƚŚĞĐŽŵƉĂŶLJŚĂƐ
ďĞĞŶĂďůĞƚŽĚŽŵƵůƟƉůĞƟŵĞƐ
ŽǀĞƌƚŚĞƉĂƐƚĨĞǁLJĞĂƌƐ͘
&ŽƌĞĐĂƐƚΨϬ͘ϰϯϮĞĂƌŶŝŶŐƐƉĞƌ
ƐŚĂƌĞ;W^ͿƚŚŝƐLJĞĂƌǁŝůůďĞ
ůĞƐƐƚŚĂŶƚŚĞΨϬ͘ϰϳϮĂĐŚŝĞǀĞĚ
ŝŶϮϬϭϳďƵƚŶŽƚƐŽŵĞƚŚŝŶŐƚŽ
ǁŽƌƌLJĂďŽƵƚ͘/ƚŐŽĞƐďĂĐŬƚŽƚŚĞ
ĐŽŶǀĞƌƐŝŽŶůĂƐƚĞĐĞŵďĞƌŽĨůŽĂŶ
ŶŽƚĞƐŝŶƚŽĞƋƵŝƚLJ͕ĂŽŶĞͲŽīĞǀĞŶƚ
ƚŚĂƚǁŝůůŶŽƚŝŵƉĂĐƚƚŚĞĮŶĂŶĐŝĂů
ƉĞƌĨŽƌŵĂŶĐĞďĞLJŽŶĚϮϬϭϴ͘
&ŝŶŶĂƉ͛ƐϮϬϭϵĞƐƟŵĂƚĞƐĐĂůů
ĨŽƌW^ŽĨΨϬ͘ϱϯϳŽŶƵŶďƌŽŬĞŶ
ƌĞǀĞŶƵĞŐƌŽǁƚŚƚŽΨϯϱŵ͘
dŚĞďƵƐŝŶĞƐƐŚĂĚΨϭϱ͘ϱŵ
ŶĞƚĐĂƐŚĂƚƚŚĞĞŶĚŽĨ:ƵŶĞƚŚŝƐ
LJĞĂƌ;ϮϬϭϳ͗Ψϲ͘ϲŵͿ͕ĨŽƌĞĐĂƐƚƚŽ
ƌŝƐĞƚŽΨϮϭ͘ϰŵďLJƚŚĞĞŶĚŽĨ
ϮϬϭϵ͘/ƚŚĂƐĂůƐŽƐƚĂƌƚĞĚƉĂLJŝŶŐ
ĚŝǀŝĚĞŶĚƐ͕ĂůƚŚŽƵŐŚƚŚŝƐLJĞĂƌ͛Ɛ
ƉƌŽƐƉĞĐƟǀĞLJŝĞůĚŝƐǀĞƌLJƐŵĂůů
ĂƚϬ͘ϯй͘;^&Ϳ
SOPHEON
1100
1000
900
800
700
600
500
400
300
2017 2018
 Demystifying
investments
for 150 years

F&C Investment Trust – pioneering 150 years ago, pioneering today.

Whatever your investment goals contact us to help you achieve them. As with all investments, the value can go
down as well as up and you may not get back your original investment.

To find out more:

Call F&C Investments 0800 915 6016 quoting 18PFC/1 (weekdays, 8.30am – 5.30pm). Calls may be recorded.
L Contact your usual financial adviser
Visit fcit150.co.uk, or search for ‘Foreign & Colonial’.

Please read our Key Features, Key Information Documents and Pre-sales cost disclosures before you invest.
These can be found at fandc.co.uk/literature.

F&C Investment Trust – the world’s oldest collective investment fund.

© 2018 BMO Global Asset Management. All rights reserved. Issued and approved by BMO Global Asset Management, a trading name of F&C Management Limited, which is authorised and regulated by the Financial
Conduct Authority. CM15222 (05/18) UK.
 GREAT IDEAS UPDATES

MELROSE INDUSTRIES TEAM17

(MRO) 216p (TM17:AIM) 230p
Loss to date: 1.1% Loss to date: 8%
Original entry point: Original entry point:
Buy at 218.5p, 26 July 2018 Buy at 250p, 5 July 2018
WZ,W^d,DK^d ALTHOUGH OUR ‘BUY’ĐĂůůŽŶǀŝĚĞŽŐĂŵĞƐŽƵƞŝƚ
ŝŵƉŽƌƚĂŶƚƉŽŝŶƚƚŽďĞŐůĞĂŶĞĚ Team17 (TM17:AIM) ŝƐŝŶƚŚĞƌĞĚ͕ǁĞ͛ƌĞŝŵƉƌĞƐƐĞĚ
ĨƌŽŵMelrose Industries’ ďLJƐŽůŝĚŚĂůĨLJĞĂƌƌĞƐƵůƚƐ;ϭϭ^ĞƉͿĂŶĚƚŚĞ/D
(MRO) ŚĂůĨLJĞĂƌƌĞƐƵůƚƐŝƐ ŶĞǁĐŽŵĞƌ͛ƐĨƵƚƵƌĞĞĂƌŶŝŶŐƐŐƌŽǁƚŚƉŽƚĞŶƟĂů͘
ƚŚĂƚ͚ŶŽďůĂĐŬŚŽůĞƐ͛ŚĂǀĞ KŶĞŽĨƚŚĞůŽŶŐĞƐƚͲƌƵŶŶŝŶŐŝŶĚĞƉĞŶĚĞŶƚ
ďĞĞŶĨŽƵŶĚƚŽĚĂƚĞƵŶĚĞƌƚŚĞ ǀŝĚĞŽŐĂŵĞƐĐŽŵƉĂŶŝĞƐ͕ĞďďŝĞĞƐƚǁŝĐŬͲůĞĚ
ďŽŶŶĞƚŽĨ'<E͕ƚŚĞάϴ͘ϭďŶ dĞĂŵϭϳĚĞǀĞůŽƉƐŝƚƐŽǁŶŐĂŵĞƐĂŶĚŚĞůƉƐ
ĂĞƌŽĂŶĚĂƵƚŽĞŶŐŝŶĞĞƌƚŚĂƚŝƐ ŝŶĚĞƉĞŶĚĞŶƚĐƌĞĂƚŽƌƐďƌŝŶŐƚŚĞŝƌŐĂŵĞƐƚŽŵĂƌŬĞƚ͖
ŵĂŶĂŐĞŵĞŶƚ͛ƐŶĞdžƚƚƵƌŶĂƌŽƵŶĚƉƌŽũĞĐƚ͘ ƚŚĞĨŽĐƵƐŝƐŽŶƉƌĞŵŝƵŵƌĂƚŚĞƌƚŚĂŶĨƌĞĞͲƚŽͲƉůĂLJ
/ĨŶŽƚŚŝŶŐĞůƐĞ͕ĐŽŵŵĞŶƚƐĂĐĐŽŵƉĂŶLJŝŶŐƚŚĞ ŐĂŵĞƐĂŶĚdĞĂŵϭϳ͛ƐǁŝŶŶŝŶŐƉŽƌƞŽůŝŽŝŶĐůƵĚĞƐ
ŶƵŵďĞƌƐƐƚƌŽŶŐůLJƐƵŐŐĞƐƚƚŚĂƚDĞůƌŽƐĞŚĂƐŶŽƚ OvercookedĂŶĚƚŚĞWormsĨƌĂŶĐŚŝƐĞ͘
ďŝƩĞŶŽīŵŽƌĞƚŚĂŶŝƚĐĂŶĐŚĞǁǁŝƚŚŝƚƐůĂƌŐĞƐƚ &ŽƌƚŚĞƐŝdžŵŽŶƚŚƐƚŽ:ƵŶĞ͕ƌĞǀĞŶƵĞƐŚŽƚƵƉ
ĂĐƋƵŝƐŝƟŽŶĞǀĞƌ͘ ϰϴйƚŽάϭϱ͘ϰŵĂŶĚĂĚũƵƐƚĞĚ/dƌŽƐĞϯϲйƚŽ
^ƵďƐƚĂŶƟĂůďŝĚĐŽƐƚƐĂŶĚũƵƐƚĂĐŽƵƉůĞŽĨŵŽŶƚŚƐ άϰ͘ϵŵ͕ĂůƚŚŽƵŐŚƚĂdžĂďůĞƉƌŽĮƚƐǁĞƌĞůŽǁĞƌĂŌĞƌ
ŽĨďƵƐŝŶĞƐƐĨƌŽŵ'<EƐĂǁDĞůƌŽƐĞƌƵŶƵƉĂ /WKͲƌĞůĂƚĞĚĐŽƐƚƐ͘
ƐƚĂƚƵƚŽƌLJƉƌĞͲƚĂdžůŽƐƐŽĨάϯϬϯŵŝŶƚŚĞƐŝdžŵŽŶƚŚƐ ƐĞdžƉĞĐƚĞĚ͕ƚŚĞĨƵůůLJĞĂƌƉĞƌĨŽƌŵĂŶĐĞǁŝůůďĞ
ƚŽϯϬ:ƵŶĞ͕ǀĞƌƐƵƐĂάϰϴŵƉƌĞͲƚĂdžƉƌŽĮƚĂLJĞĂƌĂŐŽ͘ ƐĞĐŽŶĚͲŚĂůĨǁĞŝŐŚƚĞĚĚƵĞƚŽƚŚĞƵƐƵĂůŐĂŵĞƐ
ƐǁĞĞdžƉůĂŝŶĞĚŝŶƚŚĞŽƌŝŐŝŶĂůĂƌƟĐůĞ͕DĞůƌŽƐĞ ƌĞůĞĂƐĞƐĐŚĞĚƵůĞ͘ZĞǀĞŶƵĞŐƌŽǁƚŚŝƐƐĞƚƚŽďĞ
ŝƐƐƟůůŝŶƚŚĞƉƌŽĐĞƐƐŽĨƐĞůůŝŶŐƉĂƌƚƐŽĨŝƚƐEŽƌƚĞŬ ĚƌŝǀĞŶďLJŶĞǁƉƌŽĚƵĐƚůĂƵŶĐŚĞƐĂŶĚĐŽŶƟŶƵĞĚ
ďƵƐŝŶĞƐƐ͕ǁŚŝĐŚĐŽŶƟŶƵĞƐƚŽƉĞƌĨŽƌŵƉĂƚĐŚŝůLJ͕ĂŶĚ ŐƌŽǁƚŚĨƌŽŵĂƐƚƌŽŶŐďĂĐŬĐĂƚĂůŽŐƵĞ͘
ǁĞǁŽƵůĚŶ͛ƚďĞƐƵƌƉƌŝƐĞĚƚŽƐĞĞƉƌŽŐƌĞƐƐŽŶƚŚŝƐ EĞǁĨƌĂŶĐŚŝƐĞƐŝŶĐůƵĚĞDLJdŝŵĞĂƚWŽƌƟĂ͕ƚŚĞ
ĨƌŽŶƚďĞĨŽƌĞLJĞĂƌͲĞŶĚ͘ ĮƌƐƚŐĂŵĞƉƵďůŝƐŚĞĚďLJ
Ƶƚ'<EŝƐůŝŬĞůLJƚŽĚŽŵŝŶĂƚĞƚŚĞĂŐĞŶĚĂĂƚ dĞĂŵϭϳǁŝƚŚĂŚŝŶĞƐĞ
DĞůƌŽƐĞĨŽƌƚŚĞŶĞdžƚĨĞǁLJĞĂƌƐƐŽŚĂǀŝŶŐĂďĞƩĞƌ ůĂďĞůƉĂƌƚŶĞƌ͕ĂƐǁĞůůĂƐ
ŚĂŶĚůĞŽŶƚŚĞƐĐŽƉĞĂŶĚƐĐĂůĞŽĨŽƉĞƌĂƟŽŶĂů Yoku’s Island Express͘
ŝŵƉƌŽǀĞŵĞŶƚƐĂŶĚƐĂǀŝŶŐƐ͕ĂŶĚƵůƟŵĂƚĞůLJǀĂůƵĞ 'ƌŽƐƐŵĂƌŐŝŶƐǁŝůů
ĞdžƚƌĂĐƟŽŶ͕ƌĞŵĂŝŶƐĂŬĞLJƐŚĂƌĞƉƌŝĐĞĐĂƚĂůLJƐƚ͘ ĂůƐŽŝŵƉƌŽǀĞŝŶƚŚĞ
'ĞƫŶŐƚŚĞ'<EƉƌŽũĞĐƚƌŝŐŚƚǁŽƵůĚďĞƚŚĞ ƐĞĐŽŶĚŚĂůĨĚƌŝǀĞŶďLJ
ƵůƟŵĂƚĞĞŶĚŽƌƐĞŵĞŶƚŽĨDĞůƌŽƐĞ͛ƐďƵLJ͕ŝŵƉƌŽǀĞ ƚŚĞƌĞǀĞŶƵĞŵŝdž͘
ĂŶĚƐĞůůŵŽĚĞů͘
290 TEAM 17
250 MELROSE INDUSTRIES 280
245 270
240 260
235 250
230
225 240
220 230
215 220
210 210
205 MAY JUN JUL AUG SEP
200
195
2017 2018 SHARES SAYS: È
SHARES SAYS: È Given the momentum in Team17’s chosen indie
It is very early days with GKN and we remain firmly games market and a building cash position, we’re
behind the Melrose investment story. (SF) keeping the faith at 230p. (JC)

16 | SHARES | 13 September 2018

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 GREAT IDEAS UPDATES

JD SPORTS FASHION IDEAGEN

(JD.) 490.9p (IDEA:AIM) 147.5p
Gain to date: 8.8% Gain to date: 20.4%
Original entry point: Original entry point:
Buy at 451.3p, 12 July 2018 Buy at 122.5p, 17 May 2018
KhZh>>/^,^hDDZ KDW>/EE^&dzƌƵůĞƐƐŽŌǁĂƌĞ
ĐĂůůŽŶŐůŽďĂůůLJĞdžƉĂŶĚŝŶŐ ƐƵƉƉůŝĞƌIdeagen (IDEA:AIM) ĂƉƉĞĂƌƐƚŽďĞƐƚƌŝŬŝŶŐ
JD Sports Fashion (JD.) ǁŚŝůĞƚŚĞŝƌŽŶŝƐŚŽƚ͕ƐǁŽŽƉŝŶŐŽŶŝƚƐƐĞĐŽŶĚh^
ŝƐďĞŝŶŐƌĞǁĂƌĚĞĚǁŝƚŚĂ ĂĐƋƵŝƐŝƟŽŶŝŶƐŝdžŵŽŶƚŚƐ͘dŚŝƐŵĂŬĞƐƐĞŶƐĞƐŝŶĐĞ
ƌĂƉŝĚϴ͘ϴйŐĂŝŶ͘ EŽƌƚŚŵĞƌŝĐĂƌĞƉƌĞƐĞŶƚƐŽŶĞŽĨƚŚĞďĞƐƚ͕ŝĨŶŽƚ
ŶĚǁŝƚŚƚŚĞƐƉŽƌƚƐ͕ theďĞƐƚ͕ŐƌŽǁƚŚŵĂƌŬĞƚĨŽƌŝƚƌŝŐŚƚŶŽǁ͘
ĨĂƐŚŝŽŶĂŶĚŽƵƚĚŽŽƌ dŚĞΨϱŵĚĞĂů;ƉůƵƐƵƉƚŽΨϮŵĞdžƚƌĂŝŶĚĞĨĞƌƌĞĚ
ďƌĂŶĚƐƉƵƌǀĞLJŽƌĮƌŝŶŐŽŶ ƉĞƌĨŽƌŵĂŶĐĞƉĂLJŵĞŶƚƐͿŽĨ/ŶƐƉĞĐƟŽŶyƉĞƌƚ
ĂůůĐLJůŝŶĚĞƌƐ͕ǁĞ͛ƌĞƐƚĂLJŝŶŐƉŽƐŝƟǀĞŽŶƚŚĞƐƚŽĐŬ͘ ďŽůƐƚĞƌƐŝƚƐĞdžƉŽƐƵƌĞŝŶƚŚĞĂĞƌŽƐƉĂĐĞŝŶĚƵƐƚƌLJ͕
ZŝĚŝŶŐƚŚĞ͚ĂƚŚůĞŝƐƵƌĞ͛ŵĂŵŽŶŐLJŽƵƚŚĨƵů ŽŶĞŽĨŝƚƐĐŽƌĞƚĂƌŐĞƚŵĂƌŬĞƚƐ͘dŚĂƚƌŽƵŐŚůLJϵϱй
ŐLJŵͲŐŽĞƌƐĂŶĚĨĂƐŚŝŽŶͲĐŽŶƐĐŝŽƵƐĐŽŶƐƵŵĞƌƐ͕WĞƚĞƌ ŽĨ/ŶƐƉĞĐƟŽŶyƉĞƌƚ͛ƐƌĞǀĞŶƵĞƐĂƌĞŽĨĂƌĞĐƵƌƌŝŶŐ
ŽǁŐŝůůͲůĞĚ:^ƉŽƌƚƐĐŽŶƟŶƵĞƐƚŽďƵĐŬƚŚĞǁŝĚĞƌ ŶĂƚƵƌĞƵŶĚĞƌůŝŶĞƐ/ĚĞĂŐĞŶ͛ƐĞLJĞĨŽƌĂŶŽƉƉŽƌƚƵŶŝƚLJ͘
ŚŝŐŚƐƚƌĞĞƚĚŽŽŵĂŶĚŐůŽŽŵĂŶĚǁĞ͛ƌĞĞdžĐŝƚĞĚďLJ dŚĞŶĞǁƐďƵŝůĚƐŽŶǀĞƌLJĚĞĐĞŶƚĨƵůůLJĞĂƌƌĞƐƵůƚƐ
ƚŚĞŽǀĞƌƐĞĂƐƉŽƚĞŶƟĂůŽĨƚŚĞĐŽƌĞJDĨƌĂŶĐŚŝƐĞ͘ ĂŶŶŽƵŶĐĞĚŝŶ:ƵůLJƐŚŽǁŝŶŐĂĐƋƵŝƐŝƟŽŶͲƐƚĞĚ
&ŽƌĞĐĂƐƚͲďĞĂƟŶŐŚĂůĨLJĞĂƌƌĞƐƵůƚƐ;ϭϭ^ĞƉͿ ƉƌĞͲƚĂdžƉƌŽĮƚƐƵƉϰϬйĂƚάϵ͘ϳŵ͕ĂŶĚŽƌŐĂŶŝĐ
ƐŚŽǁĞĚƐƚƌŽŶŐƐĂůĞƐŐƌŽǁƚŚ͕ĂϭϵйƌŝƐĞŝŶƉƌĞͲƚĂdž ƌĞǀĞŶƵĞŐƌŽǁƚŚŽĨϭϭй͘
ƉƌŽĮƚƚŽĂƌĞĐŽƌĚάϭϮϭ͘ϵŵĂŶĚĂǀĞƌLJƉƌŽŵŝƐŝŶŐ ZĞͲũŝŐŐĞĚĨŽƌĞĐĂƐƚƐŶŽǁĐĂůůĨŽƌάϭϭ͘ϰŵŽĨ
ĞĂƌůLJƐŚŽǁŝŶŐĨƌŽŵƚŚĞh^͘ ƉƌĞͲƚĂdžƉƌŽĮƚƚŚŝƐLJĞĂƌƚŽϯϬƉƌŝůϮϬϭϵ͕ĂŶĚ
tŚŝůĞůŝŬĞͲĨŽƌͲůŝŬĞƐĂůĞƐŐƌŽǁƚŚŝŶh<ƐƚŽƌĞƐ άϭϮ͘ϵŵŝŶƚŚĞĨŽůůŽǁŝŶŐϭϮŵŽŶƚŚƐ͕ŝŵƉůLJŝŶŐĂ
ǁĂƐƐůŝŐŚƚůLJŶĞŐĂƟǀĞ͕ĚŽƵďůĞĚŝŐŝƚŽŶůŝŶĞŐƌŽǁƚŚ ϮϬϮϬƉƌŝĐĞͲƚŽͲĞĂƌŶŝŶŐƐŵƵůƟƉůĞŽĨϮϳ͘Ϯ͘
ĞŶƐƵƌĞĚĂƉŽƐŝƟǀĞŽƵƚĐŽŵĞŽǀĞƌĂůů͕ǁŚŝůĞŝŶƐƚŽƌĞ ŝƐĂƉƉŽŝŶƚŵĞŶƚͲĨƌĞĞ
ůŝŬĞͲĨŽƌͲůŝŬĞŐƌŽǁƚŚŝŶƵƌŽƉĞǁĂƐƉŽƐŝƟǀĞ͘ ĞdžĞĐƵƟŽŶŽĨƚŚĞďƵƐŝŶĞƐƐ
dŚĞĂĐƋƵŝƐŝƟŽŶŽĨh^ĨŽŽƚǁĞĂƌƐĞůůĞƌ&ŝŶŝƐŚ>ŝŶĞ ƉůĂŶ͕ƚŽƵƐ͕ũƵƐƟĮĞƐƚŚŝƐ
ŚĂƐŐŝǀĞŶ:^ƉŽƌƚƐĂŶĞǁŐƌŽǁƚŚƉůĂƞŽƌŵĂĐƌŽƐƐ ƉƌĞŵŝƵŵƌĂƟŶŐ͘ŶĚ
ƚŚĞƉŽŶĚ͘ ƌĞŵĞŵďĞƌ͕ŵĂŶĂŐĞŵĞŶƚ
&ŽƌƚŚĞLJĞĂƌƚŽ:ĂŶƵĂƌLJ͕ďƌŽŬĞƌWĞĞů,ƵŶƚ ŚĂǀĞƚŚĞŝƌŽǁŶϮϬϬƉ
ĨŽƌĞĐĂƐƚƐĂũƵŵƉŝŶĂĚũƵƐƚĞĚƉƌĞͲƚĂdžƉƌŽĮƚĨƌŽŵ ŝŶƚĞƌŶĂůƐŚĂƌĞƉƌŝĐĞƚĂƌŐĞƚ͕
άϯϬϳ͘ϰŵƚŽάϯϰϱŵ͘ ĂŶĚǁĞǁŽƵůĚŶŽƚďĞƚ
ĂŐĂŝŶƐƚƐƵĐŚŽƉƟŵŝƐŵ͘
550 JD SPORTS FASHION 160
IDEAGEN
150
500 140
450 130
120
400 110
100
350
90
300 80
70
2017 2018 2017 2018

SHARES SAYS: È SHARES SAYS: È

We’re really happy with the share price progress and A now largely proven quality business, investors
highligh JD Sports’ qualities and overseas growth should stick with the stock for further share price
potential. (JC) upside. (SF)

18 | SHARES | 13 September 2018

THERE IS
STRENGTH
IN NUMBERS
FAMOUS PROVERB

Witan – the active multi-managed

global investment trust
Witan Investment Trust uses a multi-manager approach. By carefully
selecting fund managers to run different parts of the portfolio, we
can play to their individual strengths and avoid undue reliance on
a single manager. This method has served our shareholders well,
and the multi-manager strategy has continued to evolve. If you
seek capital growth and a growing real income from global equity
investments, we can help realise your financial ambitions.

Witan Investment Trust plc is an equity investment. The value of

an investment and the income from it can fall as well as rise as a
result of currency and market fluctuations and you may not get
back the amount originally invested.

To find out more

visit witan.com

Issued and approved by Witan Investment Services Limited. Witan Investment Services Limited is registered in
England no. 5272533 of 14 Queen Anne’s Gate, London SW1H 9AA. Witan Investment Services Limited provides
investment products and services and is authorised and regulated by the Financial Conduct Authority.
 BREXIT
6 MONTHS TO D-DAY
HOW COULD A NO-DEAL IMPACT INVESTORS?
A
s the UK prepares to leave the EU on
29 March 2019 at 11pm, there are many
ƋƵĞƐƟŽŶƐůĞŌƵŶĂŶƐǁĞƌĞĚĨŽƌŝŶǀĞƐƚŽƌƐ͕
ďƵƐŝŶĞƐƐĞƐĂŶĚƚŚĞŐĞŶĞƌĂůƉƵďůŝĐ͘
^ƚŽĐŬŵĂƌŬĞƚƐŝŶƌĞĐĞŶƚŵŽŶƚŚƐŚĂǀĞŶ͛ƚďĞĞŶ
ƚƌŽƵďůĞĚƚŽŽŵƵĐŚďLJƚŚĞƌĞdžŝƚŶĞŐŽƟĂƟŽŶƐĂƐ
ŝŶǀĞƐƚŽƌƐŚĂǀĞŚĂĚƉůĞŶƚLJŽĨŽƚŚĞƌĚŝƐƚƌĂĐƟŽŶƐ
ƐƵĐŚĂƐƚŚĞh^ͬŚŝŶĂƚƌĂĚĞǁĂƌĂŶĚǀŽůĂƟůŝƚLJŝŶ
ĞŵĞƌŐŝŶŐŵĂƌŬĞƚƐ͘dŚĞƐŝƚƵĂƟŽŶŵĂLJƐŽŽŶ
ĐŚĂŶŐĞŐŝǀĞŶǁĞ͛ƌĞŶŽǁƐŝdžŵŽŶƚŚƐĂǁĂLJĨƌŽŵ
ƚŚĞďŝŐĚĂLJŽĨƐĞƉĂƌĂƟŽŶ͘
dŚĞƚLJƉĞŽĨĞdžŝƚĨƌŽŵƚŚĞĞĐŽŶŽŵŝĐďůŽĐŬŝƐƐƟůů
ƵŶĐůĞĂƌǁŝƚŚƉŽůŝƟĐĂůŝŶĮŐŚƟŶŐĚŽŵŝŶĂƟŶŐƚŚĞ
ĂŐĞŶĚĂ͘ŶĚǁŚŝůĞŝƚŝƐŝŵƉŽƐƐŝďůĞƚŽƉƌĞĚŝĐƚƚŚĞ
ƉƌĞĐŝƐĞŝŵƉĂĐƚŽŶŝŶǀĞƐƚŽƌƐ͛ƉŽƌƞŽůŝŽƐ͕ŝƚŝƐǁŽƌƚŚ
20 | SHARES | 13 September 2018
ƵŶĚĞƌƐƚĂŶĚŝŶŐƚŚĞĚŝīĞƌĞŶƚƐĐĞŶĂƌŝŽƐĂŶĚŚŽǁƚŚĞLJ
ŵĂLJĂīĞĐƚŵĂƌŬĞƚƐ͕ĞĐŽŶŽŵŝĐƐĂŶĚĐƵƌƌĞŶĐŝĞƐ͘
ƚƌĂŶƐŝƟŽŶƉĞƌŝŽĚŝƐƐĐŚĞĚƵůĞĚƚŽďĞŐŝŶŽŶ
ϮϵDĂƌĐŚϮϬϭϵ͕ůĂƐƟŶŐƚŽϯϭĞĐĞŵďĞƌϮϬϮϬ͕ƚŽ
ůĞƚďƵƐŝŶĞƐƐĞƐĂŶĚŝŶĚŝǀŝĚƵĂůƐƉƌĞƉĂƌĞĨŽƌƚŚĞ
ƟŵĞǁŚĞŶƚŚĞŶĞǁƉŽƐƚͲƌĞdžŝƚƌƵůĞƐďĞƚǁĞĞŶ
ƚŚĞh<ĂŶĚhďĞŐŝŶ͘
&ƌĞĞŵŽǀĞŵĞŶƚǁŝůůĐŽŶƟŶƵĞĚƵƌŝŶŐƚŚĞ
ƚƌĂŶƐŝƟŽŶƉĞƌŝŽĚĂŶĚƚŚĞh<ĐĂŶƐƚƌŝŬĞƚƌĂĚĞ
ĚĞĂůƐ͕ĂůƚŚŽƵŐŚƚŚĞLJǁŽŶ͛ƚďĞĂďůĞƚŽĐŽŵĞŝŶƚŽ
ĨŽƌĐĞƵŶƟůϭ:ĂŶƵĂƌLJϮϬϮϭ͘ƵƚĨĂŝůƵƌĞƚŽƐƚƌŝŬĞ
ĂǁŝƚŚĚƌĂǁĂůĂŐƌĞĞŵĞŶƚďLJƚŚĞĚĞĂĚůŝŶĞŶĞdžƚ
DĂƌĐŚǁŽƵůĚƐĐƵƉƉĞƌƚŚŝƐƚƌĂŶƐŝƟŽŶƉĞƌŝŽĚ͕
ŚĞŶĐĞǁŚLJĂ͚ŶŽĚĞĂů͛ŽƵƚĐŽŵĞĐŽƵůĚƐƉŽŽŬƚŚĞ
ƐƚŽĐŬŵĂƌŬĞƚ͘
 UNDERSTANDING THE DIFFERENT SCENARIOS

SOFT BREXIT ƚŚĂƚŵĂŝŶƚĂŝŶƐƚŚĞŇŽǁŽĨŐŽŽĚƐ

dŚŝƐƚLJƉĞŽĨǁŝƚŚĚƌĂǁĂůĨƌŽŵƚŚĞ
hƐŚŽƵůĚĂƉƉĞĂƐĞůĂƌŐĞƐǁĂƚŚĞƐ
ŽĨƚŚĞƉŽƉƵůĂƟŽŶǁŚŽǀŽƚĞĚƚŽ
ƌĞŵĂŝŶĂŶĚŚĂƐďĞĞŶĚƵďďĞĚ
Z/EK;ƌĞdžŝƚŝŶEĂŵĞKŶůLJͿ͘/Ŷ
ƚŚŝƐƐĐĞŶĂƌŝŽ͕ƚŚĞh<ǁŽƵůĚƌĞŵĂŝŶ
ƉĂƌƚŽĨƚŚĞĐƵƐƚŽŵƐƵŶŝŽŶŝŶĂƐŝŵŝůĂƌ
ĨĂƐŚŝŽŶƚŽEŽƌǁĂLJ͛ƐŵŽĚĞů͘
ĐƵƐƚŽŵƐƵŶŝŽŶƐĞĞƐhŵĞŵďĞƌƐƚĂƚĞƐĂůů
ĐŚĂƌŐĞƚŚĞƐĂŵĞŝŵƉŽƌƚĚƵƟĞƐƚŽĐŽƵŶƚƌŝĞƐ
ŽƵƚƐŝĚĞƚŚĞh͘DĞŵďĞƌƐƚĂƚĞƐĐĂŶƚƌĂĚĞĨƌĞĞůLJ
ǁŝƚŚĞĂĐŚŽƚŚĞƌ͕ǁŝƚŚŽƵƚĐƵƐƚŽŵƐĐŚĞĐŬƐĂƚ
ďŽƌĚĞƌƐ͘/ŶĐŽŶƚƌĂƐƚ͕ĂĨƌĞĞƚƌĂĚĞĂƌĞĂĐŚĂƌŐĞƐ
ŶŽƚĂƌŝīƐ͕ƚĂdžĞƐŽƌƋƵŽƚĂƐŽŶŐŽŽĚĂŶĚƐĞƌǀŝĐĞƐ
ŵŽǀŝŶŐǁŝƚŚŝŶƚŚĞĂƌĞĂďƵƚŵĞŵďĞƌƐĂƌĞĨƌĞĞƚŽ
ƐƚƌŝŬĞƚŚĞŝƌŽǁŶĞdžƚĞƌŶĂůƚƌĂĚĞĚĞĂůƐ͘
ŽƚŚWƌŝŵĞDŝŶŝƐƚĞƌdŚĞƌĞƐĂDĂLJĂŶĚ>ĂďŽƵƌ
ůĞĂĚĞƌ:ĞƌĞŵLJŽƌďLJŶŚĂǀĞƌƵůĞĚŽƵƚƐƚĂLJŝŶŐŝŶ
ĂƐŝŶŐůĞŵĂƌŬĞƚ͘DĂLJŚĂƐĂůƐŽƐĂŝĚƚŚĞh<ǁŝůů
ŶŽƚƌĞŵĂŝŶŝŶƚŚĞĐƵƐƚŽŵƐƵŶŝŽŶĂƐŝƚƉƌĞǀĞŶƚƐ
ƌŝƚĂŝŶŶĞŐŽƟĂƟŶŐĨƌĞĞƚƌĂĚĞĂŐƌĞĞŵĞŶƚƐǁŝƚŚ
ŽƚŚĞƌĐŽƵŶƚƌŝĞƐ͘/ƚǁŽƵůĚŵĞĂŶĞǀĞƌLJƐŝŶŐůĞ
ůŽƌƌLJŐŽŝŶŐĨƌŽŵƚŚĞh<ƚŽƚŚĞhǁŽƵůĚĨĂĐĞ
ŵĂŶĚĂƚŽƌLJĐƵƐƚŽŵƐĐŚĞĐŬƐ͘
DĂƌŬtĂƌĚ͕ŚĞĂĚŽĨƚƌĂĚŝŶŐĂƚŝŶǀĞƐƚŵĞŶƚ
Įƌŵ^ĂŶůĂŵ͕ŝŵƉůŝĞƐƚŚĂƚĂƐŽŌƌĞdžŝƚǁŽƵůĚ
ůŝŵŝƚĂƐŚĂƌƉĚƌŽƉŝŶƚŚĞƐƚŽĐŬŵĂƌŬĞƚĂƐŝƚǁŽƵůĚ
ĞƐƐĞŶƟĂůůLJŵĞĂŶůŝƩůĞĐŚĂŶŐĞƚŽƚŚĞĐƵƌƌĞŶƚ
ƐLJƐƚĞŵ͘,ŽǁĞǀĞƌ͕ĂŌĞƌƚŚĞ'ŽǀĞƌŶŵĞŶƚƌĞůĞĂƐĞĚ
ŝƚƐǁŚŝƚĞƉĂƉĞƌĚƵďďĞĚƚŚĞŚĞƋƵĞƌƐĐĐŽƌĚ͕
ƚŚĞƉŽůŝƟĐĂůŵŽŽĚŚĂƐĐŚĂŶŐĞĚƐŽŵĞǁŚĂƚ͘
,ZZy/dΈt/d,'ZDEdKE
'KK^E^Zs/^Ή
/ŶƚŚŝƐƐŝƚƵĂƟŽŶ͕ƚŚĞh<ǁŽƵůĚŶŽůŽŶŐĞƌďĞ
ĂŵĞŵďĞƌŽĨƚŚĞƐŝŶŐůĞŵĂƌŬĞƚŽƌĐƵƐƚŽŵƐ
ƵŶŝŽŶ͘/ŶƐƚĞĂĚ͕ŝƚǁŽƵůĚĐŽŵĞƚŽĂŶĂŐƌĞĞŵĞŶƚ
ĂŶĚƐĞƌǀŝĐĞƐƐŝŵŝůĂƌƚŽĂŶĂĚĂ͛Ɛ
ŽŵƉƌĞŚĞŶƐŝǀĞĐŽŶŽŵŝĐdƌĂĚĞ
ŐƌĞĞŵĞŶƚǁŝƚŚƚŚĞh͘
dŚŝƐǁŽƵůĚƐƟůůďĞĚŝƐƌƵƉƟǀĞĂƐ
ŇŽǁƐŽĨŐŽŽĚƐǁŽƵůĚŶŽůŽŶŐĞƌ
ďĞĂƐĨƌĞĞ͕ĐĂƵƐŝŶŐƐƵƉƉůLJĐŚĂŝŶ
ĚŝƐƌƵƉƟŽŶ͘/ŶƌĞĂůŝƚLJƚŚŝƐǁŽƵůĚ
ƉƌŽďĂďůLJĚĞƉƌĞƐƐƐƚĞƌůŝŶŐ͛ƐǀĂůƵĞĂŶĚ
ŵĂLJƐŽŌĞŶƚŚĞh<ĞĐŽŶŽŵLJ͘
,ŽǁĞǀĞƌ͕ŝƚǁŽƵůĚŶŽƚďĞĂĚŝƐĂƐƚĞƌĨŽƌ
ĞƋƵŝƟĞƐĂŶĚŚĂƐďĞĞŶƉƌŝĐĞĚŝŶƚŽƐŽŵĞĞdžƚĞŶƚ͘
WĂƵů:ĂĐŬƐŽŶ͕ŚĞĂĚŽĨŵƵůƟͲĂƐƐĞƚƌĞƐĞĂƌĐŚĂƚ
/ŶǀĞƐĐŽWŽǁĞƌƐŚĂƌĞƐ͕ŐŝǀĞƐƚŚŝƐŽƵƚĐŽŵĞĂ
ϯϬйƉƌŽďĂďŝůŝƚLJ͘
,ZZy/dΈt/d,'ZDEdKE
'KK^KE>zΉ
/ŶƚŚŝƐƐŝƚƵĂƟŽŶ͕ƚŚĞh<ǁŽƵůĚďĞĂďůĞƚŽƚƌĂĚĞ
ǁŝƚŚƚŚĞhŝŶŐŽŽĚƐƉƌĞƩLJŵƵĐŚĂƐŶŽǁďƵƚ
ŶŽƚŝŶƐĞƌǀŝĐĞƐ͘dŚĞh<'ŽǀĞƌŶŵĞŶƚƐĞĞŵƐƚŽ
ƚŚŝŶŬƚŚŝƐǁŽƵůĚďĞĂŐŽŽĚŽƵƚĐŽŵĞďƵƚƚŚĞ
ƐĞƌǀŝĐĞŝŶĚƵƐƚƌLJǁŽƵůĚƐƵīĞƌǁŚŝĐŚŝƐďĂĚĂƐ
ŝƚĂĐĐŽƵŶƚƐĨŽƌĂďŽƵƚƚŚƌĞĞƋƵĂƌƚĞƌƐŽĨƚŚĞh<
ĞĐŽŶŽŵLJ͘
^ƚĞƌůŝŶŐǁŽƵůĚŵŽƌĞƚŚĂŶůŝŬĞůLJƐƵīĞƌŝŶƚŚŝƐ
ƐŝƚƵĂƟŽŶ͕ƉŽƐƐŝďůLJƉƵƐŚŝŶŐƚŚĞƉŽƵŶĚͬĚŽůůĂƌ
ĞdžĐŚĂŶŐĞƌĂƚĞĚŽǁŶƚŽΨϭ͘ϮϬ;ǀĞƌƐƵƐΨϭ͘ϯϬĂƚ

THE POUND VERSUS THE US DOLLAR SINCE THE BREXIT VOTE IN 2016
1.50
1.45
1.40
1.35
1.30
1.25
1.20
2016 2017 2018

13 September 2018 | SHARES | 21

 ƚŚĞƟŵĞŽĨǁƌŝƟŶŐͿǁŝƚŚƚŚĞƉŽƚĞŶƟĂůĨŽƌĂ
ƌĞĐĞƐƐŝŽŶ͘
dŚĞƐĞƌǀŝĐĞƐƐĞĐƚŽƌŝƐǀĞƌLJŝŵƉŽƌƚĂŶƚ͕
ƉĂƌƟĐƵůĂƌůLJĂƐŵĂŶLJĐŽŵƉĂŶŝĞƐǁŚŝĐŚƉƌŽǀŝĚĞ
ŐŽŽĚƐĂůƐŽƉƌŽǀŝĚĞƐĂƐƐŽĐŝĂƚĞĚƐĞƌǀŝĐĞƐƐƵĐŚĂƐ
Rolls-Royce (RR.)ǁŚŝĐŚĚĞƌŝǀĞƐĂůĂƌŐĞĐŚƵŶŬŽĨ
ƉƌŽĮƚĨƌŽŵĞŶŐŝŶĞŵĂŝŶƚĞŶĂŶĐĞ͘
dŚĞƌĂŶŐĞŽĨƐĞƌǀŝĐĞĐŽŵƉĂŶŝĞƐŝƐǀĞƌLJďƌŽĂĚ
ĂŶĚŝŶĐůƵĚĞƐƚƌĂŶƐƉŽƌƚ͕ĐŽŵŵƵŶŝĐĂƟŽŶĮƌŵƐ͕
ďĂŶŬƐ͕ŚŽƚĞůƐĂŶĚƌĞƐƚĂƵƌĂŶƚƐ͘dŚĞLJĂƌĞǁŝĚĞůLJ
ƌĞƉƌĞƐĞŶƚĞĚďLJǁĞůůͲŬŶŽǁŶĮƌŵƐŽŶƚŚĞh<
ƐƚŽĐŬŵĂƌŬĞƚ͕ŵĞĂŶŝŶŐĂŶLJƐĞƚďĂĐŬƚŽƚŚĞ
ƐĞƌǀŝĐĞŝŶĚƵƐƚƌLJĂƐĂǁŚŽůĞĐŽƵůĚŶĞŐĂƟǀĞůLJ
ŝŵƉĂĐƚŝŶǀĞƐƚŽƌƐ͘

EK>
ŶŽͲĚĞĂůƌĞƐƵůƚǁŽƵůĚŵĞĂŶƚŚĞh<͛ƐƌĞůĂƟŽŶƐŚŝƉ
ǁŝƚŚƚŚĞhǁŽƵůĚďĞĐŽŶĚƵĐƚĞĚǀŝĂtŽƌůĚdƌĂĚĞ
KƌŐĂŶŝƐĂƟŽŶƌƵůĞƐ͘'ŝǀĞŶƚŚĞŝŶĐƌĞĂƐĞŝŶƚĂƌŝīƐ͕
ŝŶŇĂƟŽŶǁŽƵůĚƉƌŽďĂďůLJƌŝƐĞĂŶĚĂƌĞĐĞƐƐŝŽŶ
ĐŽƵůĚŚĂƉƉĞŶĂƐŝƚǁŽƵůĚďĞŵŽƌĞĐŽƐƚůLJƚŽƚƌĂĚĞ
ŐŽŽĚƐǁŝƚŚŵĂŶLJŽǀĞƌƐĞĂƐƉĂƌƚŶĞƌƐ͘
'ƌŽǁƚŚĐŽƵůĚďĞƐƚĞĚŝŶƚŚĞůŽŶŐƚĞƌŵ
ǁŚĞŶŶĞǁƚƌĂĚĞĚĞĂůƐĂƌĞƐƚƌƵĐŬĂůƚŚŽƵŐŚ
ƚŚĞƌĞĂƌĞĐƵƌƌĞŶƚůLJŶŽĐŽŶĐƌĞƚĞƉůĂŶƐŝŶƉůĂĐĞ͘
^ŚĂƌĞƐŝŶh<ĚŽŵĞƐƟĐĐŽŵƉĂŶŝĞƐŵĂLJƐƵīĞƌ
ĐŽŵƉĂƌĞĚƚŽŐůŽďĂůŝŶĚŝĐĞƐĂƐƐƚĞƌůŝŶŐǁŽƵůĚ
ŵŽƐƚĐĞƌƚĂŝŶůLJƚƵŵďůĞ͘
WŚŝůŝƉ^ŵĞĂƚŽŶ͕ĐŚŝĞĨŝŶǀĞƐƚŵĞŶƚŽĸĐĞƌĂƚ
^ĂŶůĂŵ͕ƐĂLJƐƐŝŶĐĞƚŚĞ'ŽǀĞƌŶŵĞŶƚƌĞůĞĂƐĞĚŝƚƐ
ƌĞdžŝƚǁŚŝƚĞƉĂƉĞƌƚŚĞŵĂƌŬĞƚŝƐĐĞƌƚĂŝŶůLJƉƌŝĐŝŶŐ
ŝŶĂŶŽͲĚĞĂůŽƵƚĐŽŵĞ͘
tŚŝůĞƚŚŝƐŵĂLJƐĞĞŵĂƉŽƚĞŶƟĂůĚŝƐĂƐƚĞƌ͕
^ŵĞĂƚŽŶĐŽŵŵĞŶƚƐ͚͗ǀĞŶĂ͞ŶŽĚĞĂů͟ƉƌŽǀŝĚĞƐ
ĐůĂƌŝƚLJĂŶĚƐŽŵĞƚŚŝŶŐLJŽƵ͛ƌĞǁŽƌŬŝŶŐǁŝƚŚĂŶĚ
LJŽƵŬŶŽǁǁŚĂƚĞǀĞƌŚĂƉƉĞŶƐĂŌĞƌǁĂƌĚƐǁŝůůďĞ
ĂŶŝŵƉƌŽǀĞŵĞŶƚ͛͘
dŚĂƚ͛ƐďĞŝŶŐŽƉƟŵŝƐƟĐ͘/ŶƌĞĂůŝƚLJƚŚĞ
'ŽǀĞƌŶŵĞŶƚǁŽƵůĚŚĂǀĞƚŽƌĞƚŚŝŶŬŝƚƐƐƉĞŶĚŝŶŐ
ƉůĂŶƐǁŚŝĐŚĐŽƵůĚŚĂǀĞŵĂũŽƌƌĞƉĞƌĐƵƐƐŝŽŶƐ͘
sĂƌŝŽƵƐƚŚŝŶŬͲƚĂŶŬƌĞƐĞĂƌĐŚƉĂƉĞƌƐŚĂǀĞĂůƐŽ
ƐƵŐŐĞƐƚĞĚĨŽŽĚƉƌŝĐĞƐĐŽƵůĚŐŽƵƉĂŶĚǁĞĐŽƵůĚ
ƐĞĞƐŽŵĞƐŚŽƌƚĂŐĞƐŽĨŐŽŽĚƐ͕ďƵƚƚŚŝƐŵĂLJŽŶůLJ
ďĞĂƚĞŵƉŽƌĂƌLJƉŚĞŶŽŵĞŶŽŶ͘
&ƌŽŵĂŶŝŶǀĞƐƚŵĞŶƚƉĞƌƐƉĞĐƟǀĞ͕ǁĞďĞůŝĞǀĞ
ƚŚĞƐƚŽĐŬŵĂƌŬĞƚĐŽƵůĚĞdžƉĞƌŝĞŶĐĞĂƐŚŽƌƚƉĞƌŝŽĚ
ŽĨǀŽůĂƟůŝƚLJƵƉŽŶĂŶŽͲĚĞĂůŽƵƚĐŽŵĞǁŚŝĐŚ
ĐŽƵůĚƉƌŽǀĞƚŽďĞĂŐŽŽĚƟŵĞƚŽŐŽďĂƌŐĂŝŶ
ŚƵŶƟŶŐĨŽƌƐƚŽĐŬƐ͘
EKZy/dΈZD/E/Ed,hΉ
tĞƚŚŝŶŬĂ͚ŶŽƌĞdžŝƚ͛ŽƵƚĐŽŵĞŝƐŚŝŐŚůLJƵŶůŝŬĞůLJ
ĚĞƐƉŝƚĞĐŽŶƟŶƵĞĚĐĂůůƐĨŽƌĂƐĞĐŽŶĚƌĞĨĞƌĞŶĚƵŵ
ĨƌŽŵǀĂƌŝŽƵƐĐĂŵƉƐ͘dŚĞƐĞŝŶĐůƵĚĞ'D͕ŽŶĞŽĨ
ƌŝƚĂŝŶ͛ƐďŝŐŐĞƐƚƵŶŝŽŶƐ͕ĂŶĚ^ƵƉĞƌĚƌLJ;^ZzͿ
ĐŽͲĨŽƵŶĚĞƌ:ƵůŝĂŶƵŶŬĞƌƚŽŶǁŚŽƌĞĐĞŶƚůLJ
ŐĂǀĞάϭŵƚŽƚŚĞWĞŽƉůĞ͛ƐsŽƚĞĐĂŵƉĂŝŐŶĨŽƌĂ
ƌĞĨĞƌĞŶĚƵŵŽŶƚŚĞĮŶĂůƌĞdžŝƚĚĞĂů͘

UK CPI INFLATION ANNUAL PERCENTAGE CHANGE

3.50
3.00
2.50
2.00
1.50
1.00
0.50
0
2016 2017 2018

22 | SHARES | 13 September 2018

 OTHER POINTS TO CONSIDER
t,d͛^,WWEdKd,h<KEKDz
^/Ed,Zy/dsKd͍
dŚĞƌŝƟƐŚĞĐŽŶŽŵLJŚĂƐĚŝƐĂƉƉŽŝŶƚĞĚƐŝŶĐĞƚŚĞ
ƌĞĨĞƌĞŶĚƵŵǀŽƚĞƚǁŽLJĞĂƌƐĂŐŽĂƐďƵƐŝŶĞƐƐĞƐ
ŚĂǀĞďĞĐŽŵĞŵŽƌĞĐĂƵƟŽƵƐǁŝƚŚƐƉĞŶĚŝŶŐĂŶĚ
ĐŽŶƐƵŵĞƌƐŚĂǀĞďĂƩůĞĚǁŝƚŚƌŝƐŝŶŐŝŶŇĂƟŽŶ͘
/ŶϮϬϭϳ͕ƚŚĞƐĂǀŝŶŐƐƌĂƟŽͶŵĞĂƐƵƌŝŶŐƚŚĞ
ƉƌŽƉŽƌƟŽŶŽĨh<ŚŽƵƐĞŚŽůĚŝŶĐŽŵĞƚŚĂƚŝƐŶŽƚ
ƐƉĞŶƚͶĚƌŽƉƉĞĚƚŽϰ͘ϭй͕ŝƚƐůŽǁĞƐƚƌĂƚĞĨŽƌ
ŵŽƌĞƚŚĂŶϱϬLJĞĂƌƐ͘
ĐŽŶŽŵŝĐŐƌŽǁƚŚƐůŽǁĞĚŝŶϮϬϭϳĂŶĚƐƚĂƌƚĞĚ
ϮϬϭϴƉŽŽƌůLJĚƵĞƚŽƐŶŽǁĚŝƐƌƵƉƟŽŶ͘&ŝŐƵƌĞƐ
ŶŽǁƐŚŽǁĂŶŝŵƉƌŽǀĞŵĞŶƚĂƐƚŚĞLJĞĂƌ
ƉƌŽŐƌĞƐƐĞƐ͕ŚĞůƉĞĚďLJŐŽŽĚǁĞĂƚŚĞƌŽǀĞƌƚŚĞ
ƐƵŵŵĞƌ͘dŚĞůĂƚĞƐƚĮŐƵƌĞƐƐŚŽǁϬ͘ϲйŐƌŽǁƚŚ
ĨŽƌƚŚĞƚŚƌĞĞŵŽŶƚŚƐƚŽ:ƵůLJ͘
hůƟŵĂƚĞůLJƚŚĞh<ĞĐŽŶŽŵLJŚĂƐďĞĞŶƐůƵŐŐŝƐŚ
ďƵƚƚŚĞƉĞƌĨŽƌŵĂŶĐĞŚĂƐŶ͛ƚďĞĞŶĚŝƐĂƐƚƌŽƵƐĂŶĚ
ƵŶĞŵƉůŽLJŵĞŶƚƌĂƚĞƐĂƌĞůŽǁ͘
zĞƚŝŶǀĞƐƚŵĞŶƚďĂŶŬh^ďĞůŝĞǀĞƐh<'WŝƐ
ĂůƌĞĂĚLJϮ͘ϭйůŽǁĞƌƚŚĂŶǁŚĞƌĞŝƚǁŽƵůĚŚĂǀĞ
ďĞĞŶǁŝƚŚŽƵƚƌĞdžŝƚ͚͘/ŶǀĞƐƚŵĞŶƚŝƐϰйǁĞĂŬĞƌ͕
ŝŶŇĂƟŽŶϭ͘ϱйŚŝŐŚĞƌ͕ĐŽŶƐƵŵƉƟŽŶŝƐϭ͘ϳйůŽǁĞƌ
ĂŶĚƚŚĞZZ;ƌĞĂůĞīĞĐƟǀĞĞdžĐŚĂŶŐĞƌĂƚĞͿŝƐ
ϭϮйŵŽƌĞĚĞƉƌĞĐŝĂƚĞĚ͕͛ŝƚƐĂLJƐ͘
͚dŽƉƵƚϮ͘ϭйĐƵŵƵůĂƟǀĞĚĞĐůŝŶĞŝŶƌĞĂůŐƌŽǁƚŚ
ŝŶĐŽŶƚĞdžƚ͕ƚŚĂƚ͛ƐƌŽƵŐŚůLJĂƋƵĂƌƚĞƌƚŽĂƚŚŝƌĚ
ŽĨƚŚĞƚŽƚĂůƌĞdžŝƚĐŽƐƚƐĞƐƟŵĂƚĞĚŝŶƚŚĞŵŽƐƚ
ƉĞƐƐŝŵŝƐƟĐĂƐƐĞƐƐŵĞŶƚƐĚŽŶĞƉƌŝŽƌƚŽƚŚĞh
ƌĞĨĞƌĞŶĚƵŵ;ĞŐ͘,DdƌĞĂƐƵƌLJ͕KͿĂŶĚĂůŵŽƐƚ
UK GDP: quarter on quarter growth
% ĐŽŵƉĂŶŝĞƐŐĞƚĞǀĞŶŵŽƌĞũƵŵƉLJĂƐƚŚĞƌĞdžŝƚ
0.75
0.5
0.25
0 ĂǀLJ͚͘tĞŝůůƵƐƚƌĂƚĞĂŚĂƌĚƌĞdžŝƚƐĐĞŶĂƌŝŽǁŚĞƌĞ
t,d͛^d,>d^d
^ddK&W>z͍
DŝĐŚĂĞůĂƌŶŝĞƌ͕ƚŚĞh͛Ɛ
ĐŚŝĞĨŶĞŐŽƟĂƚŽƌ͕ƐĂLJƐĂŶĂŐƌĞĞŵĞŶƚ
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ĂĐƌŽƐƐƚŚĞh͘
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ƉƌĞƉĂƌĂƟŽŶƐĨŽƌĂŶĞǁďĂƐĞŝŶƵƐƚƌŝĂĂƐĂŝƌůŝŶĞƐ
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ŵĞŵďĞƌĐŽƵŶƚƌLJƚŽĂůůŽǁŝƚƚŽĐŽŶƟŶƵĞŇLJŝŶŐ
24 | SHARES | 13 September 2018
“
Small companies
are concerned with
recruiting. Without
the free movement of
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people, this limits
the potential pool
of talent available to
UK nationals
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ŶĚĂƐƐĞƚŵĂŶĂŐĞƌƐŚŵŽƌĞ;^,DͿŝƐƐĞƫŶŐ
ƵƉĂŶŽĸĐĞŝŶ/ƌĞůĂŶĚƚŽĞŶƐƵƌĞĐŽŶƟŶƵĞĚ
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hĂŶĚŚĂƐLJĞƚƚŽĂŐƌĞĞŽŶǁŚĂƚƚĞƌŵƐŝƚǁŝůů
ĚŽƐŽ͘,ĞŶĐĞ͕ǁĞĞdžƉĞĐƚĂƌĞŶĞǁĞĚďƵŝůĚͲƵƉŽĨ
ƵŶĐĞƌƚĂŝŶƚLJ͕ǁŚŝĐŚĐŽƵůĚĞǀĞŶƚƵĂůůLJůĞĂĚƚŽĂ
ĚĞĐůŝŶĞŝŶŝŶǀĞƐƚŵĞŶƚƐƉĞŶĚŝŶŐĂŶĚƉŽƚĞŶƟĂůůLJ
ƌĞĐĞƐƐŝŽŶ͛͘
KŶĞƚŚŝŶŐŝƐƉĞƌŚĂƉƐĐĞƌƚĂŝŶ͕ŝŶĂŐůŽďĂů
ĐŽŶƚĞdžƚƌĞdžŝƚŵĂLJŶŽƚƌĂŶŬĂƐŚŝŐŚůLJĂƐƚŚŽƐĞŝŶ
ƵƌŽƉĞĂŶĚĞƐƉĞĐŝĂůůLJƌŝƚĂŝŶƚŚŝŶŬ͘
h^WƌĞƐŝĚĞŶƚŽŶĂůĚdƌƵŵƉ͛ƐƚƌĂĚĞǁĂƌ
ƌŚĞƚŽƌŝĐŚĂƐďĞŝŶŐƐƉŽŽŬŝŶŐƚŚĞŵĂƌŬĞƚƐŵƵĐŚ
ŵŽƌĞƚŚĂŶƚŚĞĚĞƚĂŝůƐŽĨƚŚĞŵĂŶŶĞƌŝŶǁŚŝĐŚ
ƚŚĞh<ĞdžŝƚƐƚŚĞh͘ƚƌĂĚĞǁĂƌďĞƚǁĞĞŶƚŚĞ
h^ĂŶĚŚŝŶĂŚĂƐĨĂƌŵŽƌĞƌĞƉĞƌĐƵƐƐŝŽŶƐĨŽƌ
ƚŚĞŐůŽďĂůĞĐŽŶŽŵLJƚŚĂŶĂŵĞŵďĞƌŽĨĂŶ
ĞĐŽŶŽŵŝĐďůŽĐŬůĞĂǀŝŶŐĂŌĞƌŝƚƐĐŝƟnjĞŶƐǀŽƚĞĚ
ƚŽĚŽƐŽŝŶĂĚĞŵŽĐƌĂƟĐƉƌŽĐĞƐƐ͘
“
A trade war between
the US and China has
far more repercussions
for the global economy
than a member of
an economic block
leaving after its citizens
voted to do so in a
“
democratic process
DŝŬĞŽŽƉ͕ŚĞĂĚŽĨŵƵůƟĂƐƐĞƚƉŽƌƞŽůŝŽ
ŵĂŶĂŐĞŵĞŶƚDĂƚDŽƌŶŝŶŐƐƚĂƌ͕ƐĂLJƐ
ŵĂŶLJh<ŝŶǀĞƐƚŽƌƐĂƌĞĨŽĐƵƐĞĚŽŶƌĞdžŝƚďƵƚ
ƚŚĞLJĨŽƌŐĞƚƚŚĂƚŽƚŚĞƌĂƌĞĂƐŽĨƚŚĞǁŽƌůĚŚĂǀĞ
ƵŶĐĞƌƚĂŝŶŵĂĐƌŽŝƐƐƵĞƐ͘
͚&ŽƌĞdžĂŵƉůĞ͕ƚŚĞƌĞĂƌĞƚƌĂĚĞƉŽůŝĐLJĐŽŶĐĞƌŶƐ
ŝŶƚŚĞh^͖ŽŶƟŶĞŶƚĂůƵƌŽƉĞŚĂƐŝƚƐŽǁŶ
ĐŚĂůůĞŶŐĞƐ͕ƐƵĐŚĂƐĚĞĂůŝŶŐǁŝƚŚĮƐĐĂůƉŽůŝĐLJ
ĂŶĚƚŚĞŝŵŵŝŐƌĂƟŽŶĐƌŝƐŝƐ͖ĂŶĚŚŝŶĂŝƐ
ŵĂŶĂŐŝŶŐĂůĂƌŐĞĚĞďƚĐLJĐůĞ͘zŽƵŶĞĞĚƚŽǀŝĞǁ
ƌĞdžŝƚŝŶƚŚĞďƌŽĂĚĞƌĐŽŶƚĞdžƚŽĨǁŚĂƚĞůƐĞŝƐ
ŚĂƉƉĞŶŝŶŐŝŶƚŚĞǁŽƌůĚ͛͘
,ĞĐŽŶĐůƵĚĞƐ͚͗dŚĞƌĞǁŝůůďĞĂŵĂƚĞƌŝĂů
ĐŚĂŶŐĞŝŶŚŽǁƚŚĞh<ƚƌĂĚĞƐǁŝƚŚƵƌŽƉĞĂŶĚ
ƚŚĞŝŵƉĂĐƚŽŶƉƌŽĮƚĂďŝůŝƚLJĐŽƵůĚďĞƐŝŐŶŝĮĐĂŶƚ
ĨƌŽŵƌĞdžŝƚ͕ďƵƚůĞƐƐƐŽƚŚĂŶƉĞŽƉůĞƚŚŝŶŬ͛͘
dŚĞƚĂŬĞĂǁĂLJĨŽƌŝŶǀĞƐƚŽƌƐŝƐŶŽƚƚŽƉĂŶŝĐĂŶĚ
ƚƌLJƚŽƐĞĐŽŶĚŐƵĞƐƐǁŚĂƚǁŝůůŚĂƉƉĞŶǁŝƚŚƌĞdžŝƚ͘
dŚĞƌĞŝƐŐŽŝŶŐƚŽďĞĂĐŽŶƐŝĚĞƌĂďůĞĂŵŽƵŶƚŽĨ
ŶŽŝƐĞŽǀĞƌƚŚĞŶĞdžƚƐŝdžŵŽŶƚŚƐĂŶĚLJŽƵƐŚŽƵůĚŶ͛ƚ
ŵĂŬĞŬŶĞĞͲũĞƌŬƌĞĂĐƟŽŶƐƚŽLJŽƵƌƉŽƌƞŽůŝŽĂƐ
ĞǀĞŶƚƐƵŶĨŽůĚǁŝƚŚƚŚĞƌĞdžŝƚŶĞŐŽƟĂƟŽŶƐ͘
hůƟŵĂƚĞůLJŝƚŝƐŝŵƉĞƌĂƟǀĞLJŽƵŚĂǀĞĂ
ĚŝǀĞƌƐŝĮĞĚƉŽƌƞŽůŝŽǁŚŝĐŚƉƌŽǀŝĚĞƐĐŽǀĞƌĂŐĞ
ƚŽůŽƚƐŽĨĚŝīĞƌĞŶƚƉĂƌƚƐŽĨƚŚĞǁŽƌůĚĂŶĚŶŽƚ
ŚĞĂǀŝůLJĐŽŶĐĞŶƚƌĂƚĞĚŽŶƚŚĞh<ĂŶĚŽŶůLJŽŶĂ
ŚĂŶĚĨƵůŽĨĐŽŵƉĂŶŝĞƐ͘
DĂŬĞƐƵƌĞLJŽƵĂůƐŽŚĂǀĞĐĂƐŚƚŽŚĂŶĚƐŚŽƵůĚ
ƚŚĞƌĞďĞĂƐŚĂƌƉĚĞĐůŝŶĞŝŶƚŚĞƐƚŽĐŬŵĂƌŬĞƚŝŶ
ƚŚĞƌƵŶͲƵƉƚŽƚŚĞDĂƌĐŚϮϬϭϵƌĞdžŝƚĚĞĂĚůŝŶĞ͕
ƐŽLJŽƵĐĂŶƉŝĐŬƵƉďĂƌŐĂŝŶƐŝĨƚŚĞƌĞŝƐĂďŝŐƐŚĂƌĞ
ƐĞůůͲŽī͘;^ͬͿ
13 September 2018 | SHARES | 25
 MONEY MATTERS
What does a no-deal Brexit
mean for your pensions
and personal spending?
Important points to consider around credit cards, investments and online shopping
T
he Government has
ƌĞůĞĂƐĞĚƚŚĞĮƌƐƚŽĨ
ĂƚƌĂŶĐŚĞŽĨƉĂƉĞƌƐ
ŽƵƚůŝŶŝŶŐŚŽǁĚŝīĞƌĞŶƚŝŶĚƵƐƚƌŝĞƐ
ǁŽƵůĚďĞĂīĞĐƚĞĚďLJĂŶŽͲĚĞĂů
ƌĞdžŝƚ͘dŚĞLJŝŶĐůƵĚĞĚĞƚĂŝůƐ
ŽŶŚŽǁƚŚĞĮŶĂŶĐŝĂůƐĞƌǀŝĐĞƐ
ŝŶĚƵƐƚƌLJ͕ĐŽǀĞƌŝŶŐďĂŶŬŝŶŐ͕
ŝŶƐƵƌĂŶĐĞĂŶĚƉĞŶƐŝŽŶƐ͕ǁŽƵůĚ
ĐŚĂŶŐĞĂƐĂƌĞƐƵůƚŽĨĂ͚ŶŽĚĞĂů͛͘
DƵĐŚŽĨƚŚĞŝŶĨŽƌŵĂƟŽŶŝŶƚŚĞ
ƚĞĐŚŶŝĐĂůƉĂƉĞƌƐƌĂŝƐĞĚƉŽƚĞŶƟĂů
ŝƐƐƵĞƐ͕ďƵƚƉƌŽǀŝĚĞĚĨĞǁƐŽůƵƟŽŶƐ
on how to overcome the
ƉƌŽďůĞŵƐƌĂŝƐĞĚ͕ŽƌŝŶƐŽŵĞĐĂƐĞƐ
ŚŽǁĞdžĂĐƚůLJƚŚĞƉƌŽďůĞŵƐǁŽƵůĚ
ŽĐĐƵƌ͘ƵƚƵƐŝŶŐƚŚŽƐĞƉĂƉĞƌƐ͕
ǁĞ͛ǀĞƐƵŵŵĂƌŝƐĞĚƚŚĞďŝŐŐĞƐƚ
ŝƐƐƵĞƐĨĂĐŝŶŐLJŽƵƌĮŶĂŶĐĞƐŝŶƚŚĞ
ĞǀĞŶƚŽĨĂŶŽͲĚĞĂůƌĞdžŝƚ͘
HIGHER CARD CHARGES
/ĨǁĞůĞŌƚŚĞƵƌŽƉĞĂŶhŶŝŽŶ
ǁŝƚŚŶŽĚĞĂůŝƚ͛ƐĐůĞĂƌĨŽƌƚǁŽ
ƌĞĂƐŽŶƐƚŚĂƚƌŝƚƐǁŽƵůĚƉĂLJ
higher debit and credit card
ĐŚĂƌŐĞƐǁŚĞŶƚŚĞLJƚƌĂǀĞůůĞĚ
abroad.
&ŝƌƐƚ͕ƚŚĞh<ǁŽƵůĚŶŽůŽŶŐĞƌ
ďĞƉĂƌƚŽĨĂĐĞŶƚƌĂůƉĂLJŵĞŶƚ
ƐLJƐƚĞŵƵƐĞĚƚŽƉƌŽĐĞƐƐ
ƚƌĂŶƐĂĐƟŽŶƐŝŶĞƵƌŽƐ͘dŚŝƐŵĞĂŶƐ
ƚŚĂƚƉƌŽĐĞƐƐŝŶŐƉĂLJŵĞŶƚƐŵĂĚĞ
ďLJĂƌŝƟƐŚƉĞƌƐŽŶ͕ƵƐŝŶŐƚŚĞŝƌ
h<ďĂŶŬĐĂƌĚǁŚŝůĞƚŚĞLJĂƌĞŝŶ
ƵƌŽƉĞ͕ǁŽƵůĚƚĂŬĞůŽŶŐĞƌĂŶĚ
ďĞŵŽƌĞĐŽƐƚůLJ͘
^ĞĐŽŶĚ͕ĂďĂŶŽŶƐŽͲĐĂůůĞĚ
ƌŝƉͲŽīĨĞĞƐǁŽƵůĚŶŽůŽŶŐĞƌ
24 | SHARES | 13 September 2018
Helping you with personal finance issues
“
Mu of the
Much
M dŚĞƌĞǁĞƌĞŽŌĞŶĂůƐŽŚŝŐŚĞƌ
information in
the technical papers
raised potential
issues, but provided
few solutions on
how to overcome the
”
problems raised
ised
ĂƉƉůLJƚŽh<ĐƵƐƚŽŵĞƌƐ͘/Ŷ
:ĂŶƵĂƌLJƚŚŝƐLJĞĂƌĂŶhͲǁŝĚĞ
ďĂŶǁĂƐďƌŽƵŐŚƚŝŶĨŽƌĐĞƌƚĂŝŶ
ĐĂƌĚĐŚĂƌŐĞƐ͕ǁŚŝĐŚƐƚŽƉƉĞĚ
ĐŽŵƉĂŶŝĞƐďĞŝŶŐĂďůĞƚŽĐŚĂƌŐĞ
LJŽƵďĂƐĞĚŽŶƚŚĞŵĞƚŚŽĚLJŽƵ
ƵƐĞĚƚŽƉĂLJ͘
ĞĨŽƌĞƚŚŝƐďĂŶĞǀĞƌLJŽŶĞǁĂƐ
ĨĂŵŝůŝĂƌǁŝƚŚƚŚĞŝƐƐƵĞŽĨ͕ĨŽƌ
ĞdžĂŵƉůĞ͕ŬŝŶŐĐŚĞĂƉŇŝŐŚƚƐ
ŽŶZLJĂŶĂŝƌĂŶĚƚŚĞŶĚŝƐĐŽǀĞƌŝŶŐ
that to use certain credit or debit
cards charges would cost them
an extra £5 or £10.
ĐŚĂƌŐĞƐĂƚŽŶůŝŶĞƌĞƚĂŝůĞƌƐĨŽƌ
ƵƐŝŶŐŽŶůŝŶĞƉĂLJŵĞŶƚƐLJƐƚĞŵƐ͕
ƐƵĐŚĂƐWĂLJWĂů͘dŚĞhďĂŶ
ƉƵƚĂŶĞŶĚƚŽĐŚĂƌŐŝŶŐďĂƐĞĚ
ŽŶŚŽǁLJŽƵƉĂLJ͘,ŽǁĞǀĞƌ͕ƚŚĞ
Government warns that in a
ŶŽͲĚĞĂůƌĞdžŝƚƚŚĞh<ǁŽƵůĚďĞ
ŽƵƚƐŝĚĞƚŚŝƐhůĂǁ͕ĂŶĚƐŽƚŚŝƐ
ƌƵůŝŶŐǁŽƵůĚŶŽůŽŶŐĞƌĂƉƉůLJʹ
leaving retailers able to charge
ƚŚĞƐĞ͚ƌŝƉͲŽī͛ĨĞĞƐŽŶĐĞĂŐĂŝŶ͘
PENSIONERS ABROAD
The biggest warning in the
ƚĞĐŚŶŝĐĂůƉĂƉĞƌƐǁĂƐĨŽƌƚŚĞ
ϯϬϬ͕ϬϬϬнh<ƉĞŶƐŝŽŶĞƌƐǁŚŽ
ůŝǀĞŝŶĂŶŽƚŚĞƌhĐŽƵŶƚƌLJ͕
ĂŶĚĂƌĞƵƐŝŶŐďĂŶŬĂĐĐŽƵŶƚƐ͕
ŝŶƐƵƌĂŶĐĞŽƌƉĞŶƐŝŽŶƐŝŶƚŚĞh<͘
dŚĞƚĞĐŚŶŝĐĂůƉĂƉĞƌƐƐƚĂƚĞ
ƌŝƟƐŚĐŝƟnjĞŶƐůŝǀŝŶŐŝŶƚŚĞ
ƵƌŽƉĞĂŶhŶŝŽŶĐŽƵůĚďĞĚĞŶŝĞĚ
ĂĐĐĞƐƐƚŽƚŚĞŝƌŽǁŶŵŽŶĞLJ͚͗/Ŷ
 Helping you with personal finance issues MONEY MATTERS

ƚŚĞĂďƐĞŶĐĞŽĨĂĐƟŽŶĨƌŽŵƚŚĞ
h͕ͲďĂƐĞĚĐƵƐƚŽŵĞƌƐŽĨh<
ĮƌŵƐĐƵƌƌĞŶƚůLJƉĂƐƐƉŽƌƟŶŐŝŶƚŽ
ƚŚĞ;ƵƌŽƉĞĂŶĐŽŶŽŵŝĐ
ƌĞĂͿ͕ŝŶĐůƵĚŝŶŐh<ĐŝƟnjĞŶƐůŝǀŝŶŐ
ŝŶƚŚĞ͕ŵĂLJůŽƐĞƚŚĞĂďŝůŝƚLJ
ƚŽĂĐĐĞƐƐĞdžŝƐƟŶŐůĞŶĚŝŶŐĂŶĚ
ĚĞƉŽƐŝƚƐĞƌǀŝĐĞƐ͕ĂŶĚŝŶƐƵƌĂŶĐĞ
ĐŽŶƚƌĂĐƚƐĚƵĞƚŽh<ĮƌŵƐůŽƐŝŶŐ
ƚŚĞŝƌƌŝŐŚƚƚŽƉĂƐƐƉŽƌƚƚŽƚŚĞh͛͘
WƵƚƐŝŵƉůLJ͕ĂŶŽͲĚĞĂůƌĞdžŝƚ
ĐŽƵůĚƌĞƐƵůƚŝŶƐŽŵĞh<ĮƌŵƐ
ŶŽƚŚĂǀŝŶŐƚŚĞƌŝŐŚƚƉĞƌŵŝƐƐŝŽŶƐ
ƚŽŽƉĞƌĂƚĞŝŶhĐŽƵŶƚƌŝĞƐ͘
123456

HIGHER CARD CHARGES

This includes the insurance Using a UK bank card while in Europe
ĐŽŵƉĂŶŝĞƐǁŚŝĐŚƉĂLJŽƵƚĂŶ would take longer and be more costly

ĂŶŶƵŝƚLJ͕ǁŚŝĐŚŝƐĂƉĞŶƐŝŽŶ
ŝŶĐŽŵĞĨŽƌůŝĨĞ͕ƚŽh<ŝŶĚŝǀŝĚƵĂůƐ PENSIONERS
ůŝǀŝŶŐŝŶƚŚĞh͘ ABROAD
dŚĞƌĞĂƌĞǁĂLJƐĂƌŽƵŶĚƚŚŝƐ ^ŽŵĞh<ĮƌŵƐǁŝůůŶŽƚŚĂǀĞ
the right permissions to
ƚŚŽƵŐŚ͘dŚĞĮŶĂŶĐŝĂůƐĞƌǀŝĐĞƐ operate in EU countries.
This includes the insurance
ĐŽŵƉĂŶŝĞƐĐŽƵůĚƐĞƚƵƉĂŶ companies which pay out
hďĂƐĞ͕ŽƌĐƌĞĂƚĞĂƌĞĐŝƉƌŽĐĂů an annuity or pension

ĂŐƌĞĞŵĞŶƚǁŝƚŚĂŶhͲďĂƐĞĚ
ĐŽŵƉĂŶLJ͕ƚŽŐŝǀĞƚŚĞŵƚŚĞ
ƌŝŐŚƚƉĞƌŵŝƐƐŝŽŶƐƚŽĐŽŶƟŶƵĞ
ŽƉĞƌĂƟŶŐ͘,ŽǁĞǀĞƌ͕ƵŶƟůŝƚ͛Ɛ Extra tax charges
ĐůĞĂƌƚŚĂƚƚŚĞLJŶĞĞĚƚŽŝŶǀĞƐƚƚŚŝƐ HIGHER COSTS for Brits buying
items from
ŵŽŶĞLJĂŶĚŵĂŬĞƚŚĞƐĞĐŚĂŶŐĞƐ͕ OF ONLINE EU retailers
ƚŚĞLJĂƌĞƵŶůŝŬĞůLJƚŽĚŽƐŽ͘ SHOPPING
,ƵŐŚ^Ăǀŝůů͕ĚŝƌĞĐƚŽƌŽĨ
ƌĞŐƵůĂƟŽŶĂƚƚŚĞƐƐŽĐŝĂƟŽŶ
ŽĨƌŝƟƐŚ/ŶƐƵƌĞƌƐ͕ƐĂLJƐ͗ ĨĂĐĞŚŝŐŚĞƌĐŽƐƚƐ͘ those who do minimal business
͚KďǀŝŽƵƐůLJŝŶƐƵƌĞƌƐǁĂŶƚƚŽŵĞĞƚ dŚŝƐŝƐďĞĐĂƵƐĞĐƵƌƌĞŶƚůLJ ŝŶƚŚĞh<ŵĂLJŶŽƚĚĞĞŵŝƚ
their commitments to their ĂĐƌŽƐƐƚŚĞhƚŚĞƌĞŝƐĂsd ǁŽƌƚŚǁŚŝůĞƚŽĐŽŶƟŶƵĞ͘
ĐƵƐƚŽŵĞƌƐ͕ďƵƚƚŚŝƐƉƌŽďůĞŵŚĂƐ ǁĂŝǀĞƌŽŶƐŵĂůůƉĂĐŬĂŐĞƐ͘dŚŝƐ &ŽƌƚŚĞǀĂƐƚŵĂũŽƌŝƚLJƚŚĂƚĚŽ
ƚŚĞƉŽƚĞŶƟĂůƚŽĂīĞĐƚŵŝůůŝŽŶƐŽĨŵĞĂŶƐƚŚĂƚĨŽƌŽŶůŝŶĞŽƌĚĞƌƐ ĐŽŶƟŶƵĞƐĞůůŝŶŐƚŽh<ĐƵƐƚŽŵĞƌƐ͕
ŝŶƐƵƌĂŶĐĞĐƵƐƚŽŵĞƌƐ͕ŝŶĐůƵĚŝŶŐ ƵŶĚĞƌĂĐĞƌƚĂŝŶǀĂůƵĞ͕ƚŚĞƌĞƚĂŝůĞƌ the costs to those consumers
h<ƉĞŶƐŝŽŶĞƌƐŽǀĞƌƐĞĂƐ͘/ƚĐĂŶďĞĚŽĞƐŶ͛ƚŚĂǀĞƚŽƉĂLJsdŽŶƚŚĞ ĂƌĞůŝŬĞůLJƚŽƌŝƐĞ͕ƚŽƉĂLJĨŽƌƚŚĞ
ĮdžĞĚďLJĐŽͲŽƉĞƌĂƟŽŶďĞƚǁĞĞŶ item. The idea is that the amount sdĚƵĞĂŶĚƚŚĞŵĂŶͲŚŽƵƌƐƉƵƚ
ƚŚĞh<ĂŶĚhƌĞŐƵůĂƚŽƌƐʹŝĨƚŚĞĐŽůůĞĐƚĞĚǁŽƵůĚďĞƚŽŽƐŵĂůů͕ ŝŶƚŽƉƌŽĐĞƐƐƚŚŽƐĞƉĂLJŵĞŶƚƐ͘
hĂƵƚŚŽƌŝƟĞƐǁŝƐŚƚŽĚŽƐŽ͛͘ ĂŶĚƐŽŶŽƚǁŽƌƚŚƚŚĞƚĂdžŵĂŶ͛Ɛ dŚĞ'ŽǀĞƌŶŵĞŶƚƐĂLJƐŝƚǁŝůů
ƟŵĞĐŽůůĞĐƟŶŐŝƚ͘ ĂŝŵƚŽŝŶƚƌŽĚƵĐĞĂŶĂƵƚŽŵĂƟĐ͕
HIGHER COSTS OF ,ŽǁĞǀĞƌ͕ŝĨǁĞŵŽǀĞŽƵƚŽĨ ŽŶůŝŶĞƉĂLJŵĞŶƚƐLJƐƚĞŵƚŽƌĞĐŽƌĚ
ONLINE SHOPPING ƚŚĞhƵŶĚĞƌĂŶŽͲĚĞĂůƐĐĞŶĂƌŝŽ͕ ĂŶĚĐŽůůĞĐƚƚŚĞĂĚĚŝƟŽŶĂůsd
/ŶĂĚĚŝƟŽŶƚŽƚŚĞĂĨŽƌĞŵĞŶƟŽŶĞĚ ƚŚŝƐ͚>ŽǁsĂůƵĞŽŶƐŝŐŶŵĞŶƚ ƉĂLJŵĞŶƚƐ͕ǁŚŝĐŚǁŽƵůĚŚĞůƉƚŽ
ĞdžƚƌĂĐĂƌĚĐŚĂƌŐĞƐ͕ŝŶĂŶŽͲĚĞĂů ZĞůŝĞĨ͛ǁŝůůŶŽůŽŶŐĞƌĂƉƉůLJ͕ĂŶĚ cut the costs involved.
Brexit the Government warns ƐŽsdǁŝůůďĞĚƵĞ͘DŽƌĞƚŚĂŶ
ƚŚĂƚƌŝƚƐďƵLJŝŶŐŝƚĞŵƐĨƌŽŵ ĂŶLJƚŚŝŶŐ͕ƚŚĞƌĞƉƌĞƐĞŶƚƐĂŵĂũŽƌ Laura Suter,
hƌĞƚĂŝůĞƌƐĂŶĚƐĞůůĞƌƐĐŽƵůĚ ĂĚŵŝŶƚĂƐŬĨŽƌƌĞƚĂŝůĞƌƐ͕ĂŶĚ ƉĞƌƐŽŶĂůĮŶĂŶĐĞĂŶĂůLJƐƚ͕:Ğůů

13 September 2018 | SHARES | 25

 ADVERTORIAL FEATURE

THE IMPORTANCE
OF INCOME
One advantage of contrarian investing is that the out-of-
favour stocks we look for often offer higher-than-average
dividend yields. But we never consider a high yield an
attraction in its own right.

All that glitters is not gold – and an enticing dividend is worth

little if it can’t be sustained. That’s why we look for companies
with a yield that is both attractive and sustainable over
the long-term. As part of a ‘belt and braces’ approach we
often look for a reliable dividend to provide us with a return
while we wait for our investment thesis to play out. As we
typically invest in companies where major change is planned
or already afoot, this can be crucial. Executing an effective
turnaround can require time and patience and we want to
be sure that the company has the wherewithal to maintain
shareholder payouts through potentially turbulent times.

Being paid for our patience
If our research shows that the dividend is sustainable, then we
can afford to be patient – secure in the knowledge that we are being
paid to wait. That’s an ideal situation for us: a strong dividend yield
that gives us a consistent and attractive level of income while we
await the return of health to the business – and hence its share price.
We value dividends not only because they boost portfolio
returns, but also because we understand the importance of regular
income to our investors.
Making income more predictable
We announced a step-change increase in our dividend in
December 2017. This boosted the regular dividend by 48%, the
total dividend increased by 11%. As our investment style tends to
generate an above-average dividend income, compared with global
equities, we have rewarded our shareholders with a higher and more
predictable income stream than previously. Also, we have moved
from semi-annual to quarterly dividend payments. This provides a
more regular income to our shareholders. Of course, it should be
remembered that dividend income is not guaranteed and can go
down as well as up.
Thirty-four not out
Another key objective is to achieve dividend growth ahead of
UK inflation. We have increased our net dividend in each of the last
34 years and the net dividend has been increased or maintained
since at least the Second World War. Just as with our portfolio of
investments, the sustainability of our own dividend is important to
us and this is helped by revenue reserves of more than three times
the regular dividend. This provides a strong foundation, so were the
portfolio to experience a temporary shortfall in income the company
would still be able to maintain its dividend policy.
Drip, drip
Finally, it is always worth emphasising the potential impact of
reinvesting dividends. Dividends form a large part of total returns
and this is especially true when the income is reinvested. Certificated
shareholders can take advantage of our Dividend Reinvestment
Programme (DRIP), allowing them to harness the power of
compounding and potentially enhance returns significantly over the
long-term. As at the end of July 2018, an investment in The Scottish
Investment Trust would have returned 3 times its value over the last
20 years. With dividends reinvested, this would have increased to
3.7 times the original investment – an uplift of 25%. This underscores
the importance of income – and shows how a steady drip of dividends
can swell to a sizeable flow. ■
High conviction, global contrarian investors
For more information visit
www.thescottish.co.uk
or follow
 @ScotInvTrust
  The Scottish Investment Trust PLC

RISK WARNING
Please remember that past performance may not be repeated and is not a guide for future performance. The value of shares and the income from them can
go down as well as up as a result of market and currency fluctuations. You may not get back the amount you invest. The Scottish Investment Trust PLC has
a long-term policy of borrowing money to invest in equities in the expectation that this will improve returns for shareholders. However, should markets fall
these borrowings would magnify any losses on these investments. This may mean you get back nothing at all. Investment trusts are listed on the London Stock
Exchange and are not authorised or regulated by the Financial Conduct Authority. Please note that SIT Savings Ltd is not authorised to provide advice to
individual investors and nothing in this article should be considered to be or relied upon as constituting investment advice. If you are unsure about the suitability
of an investment, you should contact your financial advisor. Issued and approved by SIT Savings Ltd, registered in Scotland No: SC91859, registered office:
6 Albyn Place, Edinburgh, EH2 4NL. Authorised and regulated by the Financial Conduct Authority.
Telephone: 0131 225 7781 | Email: info@thescottish.co.uk | Website: www.thescottish.co.uk
 INVESTMENT TRUSTS

City of London: 4.4% yield

offers twice the return of
best-buy cash accounts
We explore why this investment trust is so popular among investors managing their
own portfolios

L aunched in 1891, City of

London Investment Trust
(CTY) has become one of
the most popular investment
trusts with investors seeking to
ƌƵŶƚŚĞŝƌŽǁŶƉŽƌƞŽůŝŽƐƌĂƚŚĞƌ
ƚŚĂŶƵƐĞƚŚĞƐĞƌǀŝĐĞƐŽĨĮŶĂŶĐŝĂů
advisers or wealth managers.
It is easy to see why the trust
appeals to so many investors,
in Shares’ view. City of London
currently yields 4.4%, based on
the past year’s dividend payout,
ĂŶŝŶĐŽŵĞƌĞƚƵƌŶƐŝŐŶŝĮĐĂŶƚůLJ
ďĞƩĞƌƚŚĂŶLJŽƵǁŽƵůĚŐĞƚŽŶ dŚŝƐLJĞĂƌŚĂƐƐĞĞŶĂƌŶŝǀĂů͛ƐĚĞďƵƚŝŶŝƚLJŽĨ>ŽŶĚŽŶ͛ƐƉŽƌƞŽůŝŽ

cash in the bank at present.

Furthermore, the trust has raised
its dividend for 51 years in a
row, so investors are enjoying a
growing income stream.
To put that into context, the
dividend yield is more than
double the current best-buy one-
LJĞĂƌĮdžĞĚƚĞƌŵƐĂǀŝŶŐƐĂĐĐŽƵŶƚ͕
being ICICI Bank UK’s product
with a 2.02% interest rate.
However, investors should
always appreciate that
investment trusts – and even
individual company shares –
CITY OF LONDON: ANNUALISED TOTAL RETURN
3 years
Share price 8.0%
Net asset value 8.2%
FTSE All-Share 10.4%
Source: Morningstar, data to 7 September 2018
aren’t obliged to keep paying
dividends and they can cut
or cancel payments at their
ŽǁŶĚŝƐĐƌĞƟŽŶ͘
THE INVESTMENT APPROACH
‘City of London’s investment style
is value and income,’ explains
ĨƵŶĚŵĂŶĂŐĞƌ:ŽďƵƌƟƐ͘
‘Value, because share price
ǀĂůƵĂƟŽŶŝƐƚŚĞŵŽƐƚŝŵƉŽƌƚĂŶƚ
ĐŽŶƐŝĚĞƌĂƟŽŶŽĨƐƚŽĐŬƐĞůĞĐƟŽŶ͘
And income, because we look at
ĚŝǀŝĚĞŶĚLJŝĞůĚĮƌƐƚĂŶĚĨŽƌĞŵŽƐƚ
5 years
7.0%
7.1%
6.7%
when we are valuing shares.
‘We take a long term view,’
ĂĚĚƐƵƌƟƐ͚͘DLJƉŚŝůŽƐŽƉŚLJŝƐ
ƉĂƌƚůLJǀĂůƵĂƟŽŶĚƌŝǀĞŶ͘^ŚĂƌĞ
ƉƌŝĐĞǀĂůƵĂƟŽŶŝƐĐƌŝƟĐĂů͘Ƶƚ
we’re looking for companies that
ŚĂǀĞƚŚĞĐĂƐŚŇŽǁƐŶŽƚŽŶůLJƚŽ
grow the dividend but also to
spend on capital expenditure to
grow the business.’
The investment trust has a bias
ƚŽǁĂƌĚƐ&d^ϭϬϬƐƚŽĐŬƐ
but investors also get exposure
to a healthy sprinkling of
mid-caps and overseas
ŝŶǀĞƐƚŵĞŶƚƐ͘dŚĞůĂƩĞƌŝŶĐůƵĚĞ
ŐůŽďĂůŚĞĂůƚŚĐĂƌĞŐŝĂŶƚDĞƌĐŬ
10 years ĂƐǁĞůůĂƐƚĞĐŚŶŽůŽŐLJƟƚĂŶ
10.4% DŝĐƌŽƐŽŌ͕ƉƵƌĐŚĂƐĞĚďĞĨŽƌĞ
9.6% ĐƵƌƌĞŶƚK^ĂƚLJĂEĂĚĞůůĂƚŽŽŬ
over in the hot seat and helped
8.0% drive a stellar performance.

13 September 2018 | SHARES | 29

 INVESTMENT TRUSTS
ĚĚƌĞƐƐŝŶŐƚŚĞƉŽƌƞŽůŝŽ͛Ɛ
ƉŽƐŝƟŽŶŝŶŐƌĞůĂƟǀĞƚŽŝŶƚĞƌĞƐƚ
ƌĂƚĞƐĞŶƐŝƟǀŝƚLJ͕ǁŝƚŚƚŚĞĂŶŬ
ŽĨŶŐůĂŶĚŚĂǀŝŶŐŝŶĐƌĞĂƐĞĚƚŚĞ
ďĂƐĞƌĂƚĞƚŽϬ͘ϳϱй͕ƵƌƟƐƉŽŝŶƚƐ
ŽƵƚ͚ƚŚŝƐŝƐƐƟůůĂŶĞdžĐĞƉƟŽŶĂůůLJ
low interest rate compared
ǁŝƚŚƚŚĞƟŵĞƚŚĂƚĂůŽƚŽĨƵƐ
remember’.
He points out that 10-year gilt
LJŝĞůĚƐĂƌĞƐƟůůĨĂŝƌůLJůŽǁĂƚϭ͘ϯй͘
͚KƵƌƉŽƌƞŽůŝŽŽĨĚŝǀŝĚĞŶĚͲƉĂLJŝŶŐ
ĞƋƵŝƟĞƐĚŽĞƐůŽŽŬǀĞƌLJĂƩƌĂĐƟǀĞ
compared to the very low
interest rates that are available
in UK government bonds or in
bank deposit accounts.’
MAJOR HOLDINGS
dŚĞƉŽƌƞŽůŝŽŝƐŝŶǀĞƐƚĞĚŝŶŚŝŐŚ
yield names including Royal
Dutch Shell (RDSB) and BP (BP.)
and lower yielders including
publisher RELX (REL) and
alcoholic beverages behemoth
Diageo (DGE).
͚/ƚŝƐĂďůĞŶĚ͕͛ƐĂLJƐƵƌƟƐ͕
‘but I do like my stocks to pay a
dividend and almost all of our
stocks have a yield of 2% or
more. And I believe in running
my winners,’ an exemplar being
precision engineer Renishaw
(RSW) which he describes as
CITY OF LONDON:
TOP TEN HOLDINGS
ZŽLJĂůƵƚĐŚ^ŚĞůů
,^
W
ƌŝƟƐŚŵĞƌŝĐĂŶdŽďĂĐĐŽ
Diageo
Unilever
WƌƵĚĞŶƟĂů
Z>y
Lloyds Banking
'ůĂdžŽ^ŵŝƚŚ<ůŝŶĞ
Source: Janus Henderson Investors, as of 31 July 2018
30 | SHARES | 13 September 2018
being an incredibly strong stock
ĨŽƌƚŚĞƉŽƌƞŽůŝŽŽǀĞƌƚŚĞLJĞĂƌƐ͘
It shouldn’t come as a
surprise that City of London’s
performance has been lacklustre
ƚŚŝƐLJĞĂƌ͕ŐŝǀĞŶŝƚƐƉŽƌƞŽůŝŽ
ĐŽŶƚĂŝŶƐƐŽŵĂŶLJ&d^ϭϬϬ
ĐŽŵƉĂŶŝĞƐ͘/ŶƚŚĞĮƌƐƚĞŝŐŚƚ
ŵŽŶƚŚƐŽĨϮϬϭϴƚŚĞ&d^ϭϬϬ
ĚĞĐůŝŶĞĚďLJϯ͘ϯйŝŶǀĂůƵĞ͘/Ŷ
contrast, City of London’s net
asset value dipped by 0.7%
ĂĐĐŽƌĚŝŶŐƚŽDŽƌŶŝŶŐƐƚĂƌ
ʹƐůŝŐŚƚůLJĚŝƐĂƉƉŽŝŶƟŶŐĨŽƌ
the market.
“
ŝŶǀĞƐƚŽƌƐďƵƚƐƟůůŽƵƚƉĞƌĨŽƌŵŝŶŐ
“
Carnival seems to be
delivering on its profits
and growth
wth
Investors shouldn’t panic
about such a short performance
period. City of London’s longer
term track record is far more
impressive.
KǀĞƌƚŚĞƉĂƐƚĚĞĐĂĚĞ͕ŝƚŚĂƐ
delivered 10.4% annualised total
return (share price gain plus
dividends) versus 8% from the
&d^ůůͲ^ŚĂƌĞǁŚŝĐŚŝƐŵĂĚĞƵƉ
ŽĨƚŚĞ&d^ϭϬϬ͕&d^ϮϱϬĂŶĚ
6.6% &d^^ŵĂůůͲĂƉŝŶĚŝĐĞƐ͘
4.5% EŽŶĞƚŚĞůĞƐƐ͕ŝŶǀĞƐƚŽƌƐƐŚŽƵůĚ
ϯ͘ϵй always appreciate that no
ϯ͘ϳй investment trust is guaranteed
to achieve the same level of
ϯ͘ϯй success in the future as it has
ϯ͘Ϭй done in the past.
2.9%
2.9% PORTFOLIO MOVEMENTS
2.6%
‘Diageo is a long term holding
and it has been a great stock for
2.4% ŵĞ͕͛ƐĂLJƐƵƌƟƐ͘,ĞĚĞƐĐƌŝďĞƐ
the Johnnie Walker whisky-to-
Tanqueray gin producer as ‘one
of our best companies in Britain,
ĂǁŽƌůĚůĞĂĚĞƌŝŶ^ĐŽƚĐŚǁŚŝƐŬLJ͕
and strong in America and
emerging markets.’
In June this year, City of
London purchased a debut stake
in Carnival (CCL), the world’s
largest cruise company.
‘We’ve never held Carnival
before; cruising is a very
ĐŽŵƉĞƟƟǀĞŚŽůŝĚĂLJďƵƚŝƚŝƐŽŶĞ
area where it’s quite hard to see
how they would be disrupted by
ŵĂnjŽŶ͕͛ĞdžƉůĂŝŶƐƵƌƟƐ͘
‘Cruising has quite a good
demographic – it has been
favoured by the ageing
ƉŽƉƵůĂƟŽŶƐǁŚŽůŝŬĞŝƚʹďƵƚ
Carnival does have brands for
younger passengers as well.
Carnival seems to be delivering
ŽŶŝƚƐƉƌŽĮƚƐĂŶĚŐƌŽǁƚŚĂŶĚŝĨ
there was a setback in the oil
price, that would be quite a good
ĐĂƚĂůLJƐƚĂŶĚŝŶƚŚĞƉŽƌƞŽůŝŽŝƚŝƐ
quite a good hedge against (oil
ƉƌŝĐĞďĞŶĞĮĐŝĂƌŝĞƐͿWĂŶĚ^ŚĞůů͛͘
Another new holding is wealth
manager St. James’s Place (STJ).
͚/ƚŝƐŽƉĞƌĂƟŶŐĂƚƚŚĞŚŝŐŚĞƌĞŶĚ
ŽĨƚŚĞĮŶĂŶĐŝĂůƐĞƌǀŝĐĞƐŵĂƌŬĞƚ
and is very much the leader
ŝŶƚŚĞh<͕͛ĞŶƚŚƵƐĞƐƵƌƟƐ͕
ĂƩƌĂĐƚĞĚƚŽƚŚĞĐŽŵƉĂŶLJ͛Ɛ
fast-growing assets under
management.
ƵƌƟƐĂůƐŽďĞůŝĞǀĞƐƚŚĞZĞĂů
ƐƚĂƚĞ/ŶǀĞƐƚŵĞŶƚdƌƵƐƚ;Z/dͿ
ƐƉĂĐĞŝƐĂŶŝŶƚĞƌĞƐƟŶŐĂƌĞĂ
and has put shareholders’
ŵŽŶĞLJƚŽǁŽƌŬǁŝƚŚƉŽƐŝƟŽŶƐ
in ƌŝƟƐŚ>ĂŶĚ;>EͿ and Land
^ĞĐƵƌŝƟĞƐ;>EͿ. ‘Both are
trading on discounts because
ŽĨƌĞdžŝƚǁŽƌƌŝĞƐĂŶĚƚŚĞĞīĞĐƚ
ŽŶƚŚĞŽĸĐĞŵĂƌŬĞƚ͘ŶĚƚŚŽƐĞ
ĚŝƐĐŽƵŶƚƐůŽŽŬǀĞƌLJĂƩƌĂĐƟǀĞ
to me.’ (JC)
 302018 OCT

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EC1A 4HD

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INVESTMENT TRUSTS FOR GROWTH WIN A HAMPER

Attend the event on 30
Whatever your ultimate investment goals if you are looking to grow your portfolio then October 2018 and you will be
investing in investment trusts can offer many benefits. In some investors’ minds investment entered into a prize draw to win
trusts are solely synonymous with income, but there are many trusts that have a growth a Fortnum & Mason Wayfarer
mandate, or a combination of growth with income. Hamper worth £150 which
There are lots of different ways that investments trusts invest to generate their will be presented on the night
growth. They can be used to get exposure to different markets and asset classes (Terms and Conditions apply)
and understanding where and how they put their money to use can help you better
understand which investment trusts are right for you.
Come to the free Investment Trusts for Growth event to hear insights from leading fund
managers on how the investment trusts they are responsible for achieve growth, get your
chance to ask the questions that matter to you and network with your fellow investors.

Baillie Gifford UK Growth Fund

The Trust aims to maximise capital growth over the long-term from with the majority of assets
held in a ‘best ideas’ portfolio of approximately 40 UK listed equities.
Henderson Alternative Strategies Trust
Benchmarked against the FTSE World Total Return index using a multi asset approach the
Trust aims to exploit global opportunities not normally accessible in one investment vehicle.
Lowland Investment Company
With an objective of delivering a combination of income and growth the Lowland
Investment Company’s portfolio is predominantly UK focussed and includes a blend of
large, medium and smaller companies.
Fundsmith Emerging Equities Trust
Using the same strategy as the Fundsmith Equity Fund the Fundsmith Emerging Equities
Trust invests in companies that have their operations, or revenue derived from, developing
economies.
EVENT CHAIR
Fidelity Special Values Trust
An actively managed contrarian trust, with a UK focus, that invests in what it believes to be
undervalued stocks with growth potential.

Click on this page for full details and to register for your complimentary ticket.

Event details Registration contact

Registrations 18:00 Lisa Frankel Daniel Coatsworth
Presentations start at 18:30 lisa.frankel@sharesmgazine.co.uk Editor
Complimentary drinks and buffet 020 7378 4406 Shares Magazine
available after the presentations
 FUNDS

Could financial funds

benefit as interest rates rise?
We look at the products to play a stronger backdrop for banks and insurers.

A ŌĞƌŵŽŶƚŚƐŽĨ
ƐƉĞĐƵůĂƟŽŶ͕ƚŚĞĂŶŬ
ŽĨŶŐůĂŶĚĮŶĂůůLJƌĂŝƐĞĚ
ŝŶƚĞƌĞƐƚƌĂƚĞƐŽŶϮƵŐƵƐƚ͘
tŝƚŚƌĂƚĞƐƐŽůŽǁĨŽƌƐŽůŽŶŐ͕
ďĂŶŬƐŚĂǀĞƐĞĞŶƚŚĞŝƌŵĂƌŐŝŶƐ
ƐƋƵĞĞnjĞĚďƵƚ͕ǁŝƚŚŝŶƚĞƌĞƐƚ
ƌĂƚĞƐŶŽǁƌŝƐŝŶŐ͕ǁŝůůƉƌŽĮƚĂďŝůŝƚLJ
ŝŵƉƌŽǀĞĂŶĚŝĨƐŽ͕ĐŽƵůĚ
ƐƉĞĐŝĂůŝƐƚĮŶĂŶĐŝĂůƐĨƵŶĚƐďĞ
ǁŽƌƚŚĐŽŶƐŝĚĞƌŝŶŐ͍
h<ďĂŶŬƐĂƌĞƐƟůůƉĂLJŝŶŐ
ŽīƚŚĞĞdžĐĞƐƐĞƐŽĨƚŚĞLJĞĂƌƐ
ƉƌĞĐĞĚŝŶŐƚŚĞĮŶĂŶĐŝĂůĐƌŝƐŝƐ͕
ǁŝƚŚǀĂƐƚƐƵŵƐƐĞƚĂƐŝĚĞƚŽ
ĐŽǀĞƌWW/ĐůĂŝŵƐ͕ůŝƟŐĂƟŽŶ
ĐŽƐƚƐĂŶĚǁƌŝƚĞĚŽǁŶƐ͕ďƵƚ
ƚŚĞƐĞůŝĂďŝůŝƟĞƐƐŚŽƵůĚŶŽǁďĞ
ŶĞĂƌŝŶŐƚŚĞŝƌĞŶĚ͘
dŚĞŝŐ&ŝǀĞ&d^ϭϬϬďĂŶŬƐ ,^͕^ƚĂŶĚĂƌĚŚĂƌƚĞƌĞĚ͕Z^͕>ůŽLJĚƐĂŶĚĂƌĐůĂLJƐƌĞƉŽƌƚĞĚĂĐŽŵďŝŶĞĚάϵ͘ϯďŶƉƌĞͲƚĂdžƉƌŽĮƚƐ
ƌĞƉŽƌƚĞĚάϵ͘ϯďŶŝŶƉƌĞͲƚĂdžƉƌŽĮƚ
ŝŶYϮϮϬϭϴ͕ƚŚĞŝƌďĞƐƚƚŚƌĞĞͲ ƚŚĞŵŽƐƚƐŝŵƉůĞďƵƐŝŶĞƐƐŝŶ ďĞƚǁĞĞŶŝŶƚĞƌĞƐƚƌĂƚĞƐĂŶĚ
ŵŽŶƚŚƐŚŽǁŝŶŐŝŶĮǀĞLJĞĂƌƐ͘ ƚŚĞǁŽƌůĚ͗LJŽƵůĞŶĚŵŽŶĞLJĂƚ ďĂŶŬƐ͛ďŽƩŽŵůŝŶĞƐŝƐŶŽƚĂ
Barclays (BARC) ĂŶĚLloyds ŽŶĞƌĂƚĞ͕LJŽƵƉĂLJĚĞƉŽƐŝƚŽƌƐ ŽŶĞͲĨŽƌͲŽŶĞĐŽƌƌĞůĂƟŽŶ͕ŶŽƚĞƐ
(LLOY)ďŽƚŚƌĂŝƐĞĚƚŚĞŝƌŝŶƚĞƌŝŵ ĂŶŽƚŚĞƌĂŶĚLJŽƵĞĂƌŶƚŚĞŵĂƌŐŝŶ DŝŬĞŽŽƉ͕ŚĞĂĚŽĨŵƵůƟͲ
ĚŝǀŝĚĞŶĚƐ͕ǁŚŝůĞRoyal Bank of ďĞƚǁĞĞŶƚŚĞƚǁŽ͘ ĂƐƐĞƚƉŽƌƞŽůŝŽŵĂŶĂŐĞŵĞŶƚĂƚ
Scotland (RBS) ĂŶĚStandard ͚ĂŶŬƐŚĂǀĞŐŽƚďĂĐŬƚŽĚŽŝŶŐ DŽƌŶŝŶŐƐƚĂƌ͘
Chartered (STAN) ƌĞƐƵŵĞĚ ƚŚĂƚĂŶĚ͕ĂƐƌĂƚĞƐŐŽƵƉ͕ƚŚĞ ͚dŚŝƐůŝŶŬǁŝƚŚŝŶƚĞƌĞƐƚƌĂƚĞƐŝƐ
ĮƌƐƚͲŚĂůĨĚŝǀŝĚĞŶĚƉĂLJŵĞŶƚƐ͕ ĂŵŽƵŶƚƚŚĞLJĐĂŶĞĂƌŶŽŶƚŚĂƚ ŶŽƚƐƚĂďůĞĂŶĚŝƐŶŽƚĂƌĞůŝĂďůĞ
ƉƵƫŶŐƚŚĞŵŽŶƚƌĂĐŬĨŽƌ ĚŝīĞƌĞŶƟĂůŝŶĐƌĞĂƐĞƐƚŽŽƐŽ ǁĂLJŽĨĂƐƐĞƐƐŝŶŐǁŚĂƚŝƐŐŽŝŶŐ
ƚŚĞŝƌůĂƌŐĞƐƚĐŽŵďŝŶĞĚƉĂLJŽƵƚ ǁĞƐŚŽƵůĚƐĞĞĂŶŝŶĐƌĞĂƐĞŝŶ ƚŽŚĂƉƉĞŶ͕͛ŚĞƐĂLJƐ͕ƉŽŝŶƟŶŐƚŽ
ƐŝŶĐĞϮϬϬϳ͘,ŽǁĞǀĞƌ͕ƚŚĞƐĞ ƉƌŽĮƚĂďŝůŝƚLJĂŶĚĂŶŝŶƚĞƌĞƐƟŶŐ ŽƚŚĞƌĨĂĐƚŽƌƐůŝŬĞƚŚĞŝŶƚĞƌĞƐƚ
ĞŶĐŽƵƌĂŐŝŶŐƐŝŐŶƐĂƌĞŶŽƚLJĞƚ ŽƉƉŽƌƚƵŶŝƚLJĨŽƌŝŶǀĞƐƚŽƌƐ͛͘ ƚŚĞLJƉĂLJŽŶƚŚĞŝƌŽǁŶĨƵŶĚŝŶŐ
ďĞŝŶŐƌĞŇĞĐƚĞĚŝŶƐŚĂƌĞƉƌŝĐĞƐ͘ ,ĞĂĚĚĞĚh<ďĂŶŬƐĂƌĞ ƐŽƵƌĐĞƐ͕ƚŚĞƋƵĂŶƟƚLJŽĨŵŽŶĞLJ
ƐŚŽǁŝŶŐĂĐŽŵŵŝƚŵĞŶƚƚŽƉĂƐƐ ƚŚĞLJĐĂŶůĞŶĚ͕ĂŶĚƚŚĞĂŵŽƵŶƚ
BACK TO BANKING ƚŚŽƐĞŝŶĐƌĞĂƐĞƐŽŶƚŽŝŶǀĞƐƚŽƌƐ ŽĨďĂĚĚĞďƚŽŶƚŚĞŝƌŬƐ͘
ZLJĂŶ,ƵŐŚĞƐ͕ŚĞĂĚŽĨĂĐƟǀĞ ĂƐĚŝǀŝĚĞŶĚƐ͕ĂŶĚƚŚŝƐƐŚŽƵůĚ ,ĞƉŽŝŶƚƐŽƵƚƚŚĂƚŝŶĐŽŵĞ
ƉŽƌƞŽůŝŽƐĂƚ:Ğůů͕ƐĂLJƐďĂŶŬƐ ďĞƌĞǁĂƌĚĞĚŝŶƐŚĂƌĞƉƌŝĐĞ ĨŽƌƵƌŽƉĞĂŶĂŶĚh<ďĂŶŬƐŚĂƐ
ŚĂǀĞŶŽƚďĞĞŶĂŐƌĞĂƚƉůĂĐĞƚŽ ƉĞƌĨŽƌŵĂŶĐĞ͘ ĂĐƚƵĂůůLJƌŝƐĞŶƐŝŶĐĞϮϬϭϯ͕ĞǀĞŶ
ďĞŝŶǀĞƐƚĞĚ͕ďƵƚƚŚĞĨŽĐƵƐŝƐ ƚŚŽƵŐŚŝŶƚĞƌĞƐƚƌĂƚĞƐĐĂŵĞĚŽǁŶ
ŶŽǁďĂĐŬŽŶƚŚĞĚĂLJũŽď͘ THE LINK WITH RATES ŽǀĞƌƚŚĂƚƉĞƌŝŽĚĂŶĚƐƚĂLJĞĚůŽǁ͘
͚ĂŶŬŝŶŐŝƐĂŶĚƐŚŽƵůĚďĞ ,ŽǁĞǀĞƌ͕ƚŚĞƌĞůĂƟŽŶƐŚŝƉ dŚŝƐŝƐďĞĐĂƵƐĞďĂŶŬƐǁĞƌĞĂďůĞ

32 | SHARES | 13 September 2018

 FUNDS

“
ƚŽƌĞĚƵĐĞƚŚĞŝƌĐŽƐƚƐĂŶĚƚŚĞ ŝƐŝŶĮŶĂŶĐŝĂůƐ͕ďƵƚŝƚŝƐŵĂĚĞ
ŝŶƚĞƌĞƐƚƚŚĞLJƉĂŝĚŽŶƚŚĞŝƌůŽĂŶƐ͘ ƵƉŽĨŵŽƌĞŝŶǀĞƐƚŵĞŶƚďĂŶŬƐ
,ŝƐǀŝĞǁŝƐƚŚĂƚƌĞůĂƟǀĞ ƚŚĂŶƌĞƚĂŝůďĂŶŬƐ͘ Banking is and
ǀĂůƵĂƟŽŶďĂƐĞĚŽŶƐƵƐƚĂŝŶĂďůĞ
ĞĂƌŶŝŶŐƐŝƐĂŵŽƌĞƌĞůŝĂďůĞŐƵŝĚĞ
ƚŽďĂŶŬƉĞƌĨŽƌŵĂŶĐĞƚŚĂŶƚŚĞ
ĚŝƌĞĐƟŽŶŽĨƌĂƚĞƐ͘KŶƚŚŝƐŵĞƚƌŝĐ͕
ďĂŶŬƐůŽŽŬďĞƩĞƌǀĂůƵĞƚŚĂŶ
ĞdžƉĞŶƐŝǀĞŐůŽďĂůĞƋƵŝƟĞƐĂƚƚŚĞ
ŵŽŵĞŶƚ͕ƐĂLJƐŽŽƉ͕ĂůƚŚŽƵŐŚŚĞ
ǁĂƌŶƐƚŚĞLJĂƌĞ͚ŶŽƚĐŚĞĂƉĂŶĚ
ĂƌĞŝŶŚĞƌĞŶƚůLJƌŝƐŬLJ͛͘
/ĨLJŽƵǁĂŶƚŵŽƌĞĞdžƉŽƐƵƌĞ͕Ă
ŚĂŶĚĨƵůŽĨĂĐƟǀĞĨƵŶĚƐĞdžŝƐƚǁŝƚŚ
ůŽŶŐƚƌĂĐŬƌĞĐŽƌĚƐ͕ŚĞĂĚĞĚďLJ
ĞdžƉĞƌŝĞŶĐĞĚŵĂŶĂŐĞƌƐ͘,ƵŐŚĞƐ
ŚŝŐŚůŝŐŚƚƐ:ƵƉŝƚĞƌ/ŶƚĞƌŶĂƟŽŶĂů
Financials (B58D9P3)͕ŵĂŶĂŐĞĚ
ďLJ'ƵLJĚĞůŽŶĂLJ͕ĂŶĚJanus
Henderson Global Financials
(3191923)͕ǁŚŝĐŚŚĂĚĂŵĂŶĂŐĞƌ
should be the most
simple business in
the world: you lend
money at one rate,
you pay depositors
another and you
earn the margin
“
ĐŚĂŶŐĞůĂƐƚLJĞĂƌ͘ between thee two
ACTIVE FUND PICKS DŽƌŶŝŶŐƐƚĂƌĨƵŶĚĂŶĂůLJƐƚ
dŚĞƌĞŝƐŵŽƌĞƚŽƚŚĞĮŶĂŶĐŝĂů ^ĂŵƵĞůDĞĂŬŝŶƉŽŝŶƚƐƚŽƚŚĞ
ƐĞĐƚŽƌƚŚĂŶũƵƐƚƚŚĞďŝŐďĂŶŬƐ͘ ŵƵĐŚůĂƌŐĞƌFidelity Global
/ƚŝŶĐŽƌƉŽƌĂƚĞƐĂǁŝĚĞƐƉĞĐƚƌƵŵ Financial Services (BJVDYZ3)
ŝŶĐůƵĚŝŶŐŐĞŶĞƌĂůŝŶƐƵƌĞƌƐ͕ ĨƵŶĚ͕ƌƵŶďLJ^ŽƟƌŝƐŽƵƚƐŝƐ͘
ƌĞŝŶƐƵƌĞƌƐ͕ĂƐƐĞƚŵĂŶĂŐĞƌƐ ĞĐĂƵƐĞƚŚĞŵĂŶĂŐĞƌŝŶǀĞƐƚƐ
ĂŶĚƐƵďͲƉƌŝŵĞůĞŶĚĞƌƐ͘ ŝŶƋƵĂůŝƚLJĮŶĂŶĐŝĂůƐƚŽĐŬƐ͕ƚŚĞ ƉĂƐƐŝǀĞƉƌŽĚƵĐƚƐůŝŬĞĞdžĐŚĂŶŐĞͲ
,ƵŐŚĞƐĞdžƉůĂŝŶƐƚŚĂƚƐŽŵĞ ĨƵŶĚŝƐŵŽƌĞůŝŬĞůLJƚŽŽƵƚƉĞƌĨŽƌŵ ƚƌĂĚĞĚĨƵŶĚƐĂƌĞĂŐŽŽĚƐƚĂƌƟŶŐ
ŽĨŝŶƐƵƌĞƌƐ͛ƉƌŽĮƚĂďŝůŝƚLJĐŽŵĞƐ ŝŶĂĨĂůůŝŶŐŵĂƌŬĞƚ͕ŚĞƐĂLJƐ͘ ƉŽŝŶƚĨŽƌŝŶǀĞƐƚŽƌƐŝŶƚĞƌĞƐƚĞĚŝŶ
ĨƌŽŵǁŚĂƚƚŚĞLJĞĂƌŶŽŶƚŚĞŝƌ /ŶƚŚĞĐůŽƐĞĚͲĞŶĚĞĚƐƉĂĐĞ͕ŽŶĞ ĮŶĂŶĐŝĂůƐƚŽĐŬƐ͘
ĐĂƐŚďĂůĂŶĐĞƐ͕ƐŽƚŚĞLJĐŽƵůĚ ŽƉƟŽŶŝƐƚŚĞPolar Capital Global ,ƵŐŚĞƐƐĂLJƐŝŶǀĞƐƚŽƌƐƐŚŽƵůĚ
ůŽŽŬĂƩƌĂĐƟǀĞŝŶĂƌŝƐŝŶŐŝŶƚĞƌĞƐƚ Financials (PCFT) ŝŶǀĞƐƚŵĞŶƚ ƚŚŝŶŬĂďŽƵƚǁŚLJƚŚĞLJĂƌĞŐŽŝŶŐ
ƌĂƚĞĞŶǀŝƌŽŶŵĞŶƚ͘,ĞƐƵŐŐĞƐƚƐ ƚƌƵƐƚ͕ǁŚŝĐŚŚĂƐĂƌŽƵŶĚϲϰйŝŶ ŝŶƚŽƚŚĞƐĞĐƚŽƌ͕ŚŽǁůŽŶŐƚŚĞLJ
Polar Capital Global Insurance ŐůŽďĂůďĂŶŬƐĂŶĚϭϭйŝŶŝŶƐƵƌĞƌƐ͘ ƉůĂŶƚŽŬĞĞƉƚŚĞŝƌĞdžƉŽƐƵƌĞ͕ĂŶĚ
(B530JS2)ĂƐĂƐƉĞĐŝĂůŝƐƚĨƵŶĚ DĞĂŬŝŶĂĚĚƐ͚͗/ĨLJŽƵĂƌĞ ǁŚĞƚŚĞƌĂŶĂĐƟǀĞŵĂŶĂŐĞƌĐĂŶ
ǁŚŝĐŚƐŚŽƵůĚďĞŶĞĮƚĨƌŽŵ ůŽŽŬŝŶŐƚŽŝŶǀĞƐƚŝŶƐƉĞĐŝĂůŝƐƚ ĚŽǁĞůůĞŶŽƵŐŚŽǀĞƌƚŚĂƚƟŵĞƚŽ
ƚŚŝƐƚƌĞŶĚ͘ ĮŶĂŶĐŝĂůƐĨƵŶĚƐ͕ŐŝǀĞŶLJŽƵĂƌĞ ũƵƐƟĨLJƚŚĞŝƌĨĞĞƐ͘
&ŝŶĂŶĐŝĂůƐŵĂŬĞƵƉĂůĂƌŐĞƉĂƌƚ ƚĂŬŝŶŐŽŶƚŚĞƐƚLJůĞƌŝƐŬŽĨƚŚĞ ͚dŚĞƌĞŝƐŶŽƚĂŚƵŐĞĂŵŽƵŶƚ
ŽĨƚŚĞh<ƐƚŽĐŬŵĂƌŬĞƚ͕ĂƌŽƵŶĚ ŵĂŶĂŐĞƌ͕LJŽƵǁĂŶƚƚŽŚŽůĚ ŽĨĞǀŝĚĞŶĐĞŽĨ΀ĂĐƟǀĞŵĂŶĂŐĞƌ΁
ϮϬй͘ŶLJŝŶǀĞƐƚŽƌǁŚŽŽǁŶƐĂ ƚŚĞŵĂƐůŽŶŐͲƚĞƌŵŚŽůĚŝŶŐƐĨŽƌ ƐŬŝůůĂŶĚĂůƉŚĂƚŚĂƚŝƐĐŽŶƐŝƐƚĞŶƚ
&d^ůů^ŚĂƌĞƚƌĂĐŬĞƌŽƌĂŶĂĐƟǀĞ ĂƚůĞĂƐƚƚŚƌĞĞƚŽĮǀĞLJĞĂƌƐ͛͘ ŽǀĞƌƟŵĞƐŽ/ƚŚŝŶŬƚŚĂƚǁŽƵůĚ
h<ĞƋƵŝƚLJĨƵŶĚŝƐůŝŬĞůLJƚŽĂůƌĞĂĚLJ ƉƵƐŚŵĞƚŽǁĂƌĚƐƐŝŵƉůLJƚĂŬŝŶŐ
ŚĂǀĞƌĞĂƐŽŶĂďůĞĞdžƉŽƐƵƌĞ͘/ŶƚŚĞ A PASSIVE APPROACH ƚŚĞƉĂƐƐŝǀĞŽƉƟŽŶĂŶĚďƵLJŝŶŐ
h^͕ĂƌŽƵŶĚϭϰйŽĨƚŚĞ^ΘWϱϬϬ ůůƚŚƌĞĞĨƵŶĚĞdžƉĞƌƚƐƐĂLJ ƉƵƌĞĞdžƉŽƐƵƌĞƚŽĞŝƚŚĞƌďĂŶŬƐ

PERFORMANCE OF A SELECTION OF FINANCIALS FUNDS

FUND 1y return (%) 3yr return (%) 5yr return (%)
:ƵƉŝƚĞƌ/ŶƚĞƌŶĂƟŽŶĂů&ŝŶĂŶĐŝĂůƐ ϭϭ͘ϭ ϱϯ͘Ϭ ϴϱ͘ϳ
Lyxor UCITS ETF MSCI World Financials ϲ͘Ϭ ϱϭ͘Ϭ ϳϯ͘ϳ
Fidelity Global Financial Services ϲ͘ϯ ϰϲ͘ϵ ϳϮ͘ϳ
Janus Henderson Global Financials ϴ͘ϱ ϰϭ͘ϯ ϲϯ͘ϭ
Polar Capital Global Financials Trust ϳ͘ϰ ϯϵ͘ϯ ϱϬ͘ϵ
Polar Capital Global Insurance ϴ͘ϱ Ϭ͘ϲ ϭϬϲ͘ϵ
Source: FE. Performance values rebased to pound sterling.

13 September 2018 | SHARES | 33

 FUNDS

ŽƌĮŶĂŶĐŝĂůƐ͛͘,ĞƉŽŝŶƚƐƚŽƚŚĞ ǁŽƵůĚŚĂǀĞƚŽǁŽƌŬǀĞƌLJŚĂƌĚƚŽ ŵĂŶĂŐĞŵĞŶƚ͘

Lxyor MSCI World Financials
ETF (FINW)͕ǁŚŝĐŚĂƚϯϬďĂƐŝƐ
ƉŽŝŶƚƐŝƐůŽǁĐŽƐƚĂŶĚƚƌĂĐŬƐĂ
ďƌŽĂĚͲďĂƐĞĚŝŶĚĞdžƐŽŝƚŝƐǁĞůů
ĚŝǀĞƌƐŝĮĞĚ͘
͚/ƚŝƐĂŐŽŽĚϰϬͲϱϬďĂƐŝƐ
ƉŽŝŶƚƐĐŚĞĂƉĞƌƚŚĂŶĂŶLJĂĐƟǀĞ
ƐƚƌĂƚĞŐLJƐŽƚŚĞĂĐƟǀĞŵĂŶĂŐĞƌƐ
ŽƵƚƉĞƌĨŽƌŵƚŚĂƚ͛͘
ŽŽƉĂŐƌĞĞƐ͕ŶŽƟŶŐƚŚĂƚ
ŝŶǀĞƐƚŽƌƐ͛ŐŽͲƚŽƉƌŽĚƵĐƚƚLJƉĞĨŽƌ
ĞdžƉŽƐƵƌĞƚŽĂĐŽŵƉĞůůŝŶŐƉĂƌƚŽĨ
ƚŚĞŵĂƌŬĞƚƐŚŽƵůĚďĞƚŚƌŽƵŐŚ
ĂĐŚĞĂƉd&ĂƐĂƐƚĂƌƟŶŐƉŽŝŶƚ͕
ďĞĨŽƌĞƚŚĞLJĚĞĐŝĚĞǁŚĞƚŚĞƌ
ŝƚ͛ƐǁŽƌƚŚƉĂLJŝŶŐĨŽƌĂĐƟǀĞ
͚dŚĞƌĞ͛ƐŶŽŽŶĞƐŝnjĞĮƚƐĂůů͕
ďƵƚƚŚĞĐŽƐƚŽĨŵŽƌĞƐƉĞĐŝĂůŝƐĞĚ
ĞdžƉŽƐƵƌĞƉĂƌƟĐƵůĂƌůLJĨŽƌƌĞƚĂŝů
ŝŶǀĞƐƚŽƌƐŵĞĂŶƐLJŽƵǁĂŶƚƚŽďĞ
ƚŚŝŶŬŝŶŐƚǁŝĐĞ͘ƚƚŚĞŵŽŵĞŶƚ
ǁĞĚŽŶ͛ƚƚŚŝŶŬƚŚĞŽƉƉŽƌƚƵŶŝƟĞƐ
ĂƌĞĂƩƌĂĐƟǀĞĞŶŽƵŐŚƚŽŐŽĚŽǁŶ
ƚŚĂƚƌŽƵƚĞ͛͘;,^Ϳ

2018 ESTIMATED PRICE/EARNINGS AND DIVIDENDS

FOR THE BIG FIVE UK QUOTED BANKS
BANK Price/earnings (P/E) Price/book Dividend yield Dividend cover
HSBC ϭϭ͘ϯ Ϭ͘ϵ ϲ͘Ϭй ϭ͘ϱdž
Lloyds ϴ͘Ϯ Ϭ͘ϵ ϱ͘ϳй Ϯ͘ϭdž
Royal Bank of Scotland ϵ͘ϱ Ϭ͘ϲ Ϯ͘ϱй ϰ͘ϯdž
Standard Chartered ϭϬ͘ϵ Ϭ͘ϱ Ϯ͘ϳй ϯ͘ϰdž
Barclays ϴ͘ϴ Ϭ͘ϱ ϯ͘ϳй ϯ͘ϭdž
Source: FE

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 AEQUITAS Insightful commentary on market issues

Why September
is an important
month for Japan
(if not the world)
Monetary policy update and
leadership contest top the opponent is former Defence Minister
agenda ^ŚŝŐĞƌƵ/ƐŚŝďĂ͘ďĞƐĂǁŚŝŵŽīƚŽǁŝŶ
the LDP leadership in 2012 so he does

S
not look overly threatening especially as
eptember is going to be an former Foreign Minister Fumio Kishida’s
important month for those investors decision to support the PM looks to
who have exposure to Japan. ƐŶƵīŽƵƚĂŶLJƌŽŽŵĨŽƌĚŝƐƐĞŶƚǁŝƚŚŝŶ
First, the Bank of Japan (BoJ) is the party ranks.
scheduled to provide its latest monetary ƐƐƵĐŚ͕ŝƚƐĞĞŵƐƚŚĂƚďĞ͛ƐƉŽůŝƟĐĂů
By Russ Mould,
policy decision on 19 September. investment colleagues like what they see, every bit
Although Governor Haruhiko Kuroda director, AJ Bell ĂƐŵƵĐŚĂƐĂŶLJŽŶĞǁŝƚŚƉŽƌƞŽůŝŽ
ŝƐƉƵďůŝĐůLJƐƟůůƉƌĞƐƐŝŶŐĂŚĞĂĚǁŝƚŚ ĞdžƉŽƐƵƌĞƚŽƚŚĞdŽŬLJŽŵĂƌŬĞƚƐ͘
ƋƵĂůŝƚĂƟǀĞĂŶĚƋƵĂŶƟƚĂƟǀĞĞĂƐŝŶŐ;YYͿ͕ƚŚĞ dŚĞEŝŬŬĞŝϮϮϱŝŶĚĞdžŝƐƵƉďLJϭϯϬйƐŝŶĐĞďĞ͛Ɛ
Ž:ŝƐƵŶĚĞƌƐŚŽŽƟŶŐŝƚƐďŽŶĚͲďƵLJŝŶŐƚĂƌŐĞƚƐ landslide win in 2012 in local currency terms (it is
ĂŶĚĮŶĚŝŶŐŝƚĂŶŝŶĐƌĞĂƐŝŶŐƐƚƌƵŐŐůĞƚŽďĞŶĚƚŚĞ ƵƉďLJϭϭϰйŝŶƐƚĞƌůŝŶŐ͕ĐŽŵƉĂƌĞĚƚŽĂϮϯйŐĂŝŶŝŶ
market for Japanese government bonds to its will. ƚŚĞ&d^ůůͲ^ŚĂƌĞŽǀĞƌƚŚĞƐĂŵĞƉĞƌŝŽĚͿƚŚĂŶŬƐ
^ĞĐŽŶĚ͕WƌŝŵĞDŝŶŝƐƚĞƌ^ŚŝŶnjƃďĞŵƵƐƚĮŐŚƚ ĂƚůĞĂƐƚŝŶƉĂƌƚƚŽƚŚĞdŚƌĞĞƌƌŽǁƐƉƌŽŐƌĂŵŵĞ͕
a triennial contest for the leadership of the ruling which comprises:
>ŝďĞƌĂůĞŵŽĐƌĂƟĐWĂƌƚLJ;>WͿŽŶŽƌďĞĨŽƌĞ • &ŝƐĐĂůƐƟŵƵůƵƐ
ϮϬ^ĞƉƚĞŵďĞƌ͘ůŽƐƐĐŽƵůĚƐĞĞŚŝƐƉŽƐŝƟŽŶĂƐ • ĐŽŶŽŵŝĐĂŶĚƐŽĐŝĂůƌĞĨŽƌŵ͕ŝŶĐůƵĚŝŶŐĂ
WDďĞĐŽŵĞƵŶƚĞŶĂďůĞĂŶĚƚŚĞƐŽͲĐĂůůĞĚ͚dŚƌĞĞ ƐŚĂŬĞͲƵƉŽĨĐŽƌƉŽƌĂƚĞŐŽǀĞƌŶĂŶĐĞĂŶĚŚŽǁ
ƌƌŽǁƐ͕͛Žƌ͚ďĞŶŽŵŝĐƐ͛ƉƌŽŐƌĂŵŵĞĐŽŵĞƵŶĚĞƌ companies interact with investors, an area of
ƚŚƌĞĂƚ͕ƚŽƚŚĞƉŽƚĞŶƟĂůĐŽŶƐƚĞƌŶĂƟŽŶŽĨƚŚŽƐĞ ŐƌĞĂƚŝŵƉƌŽǀĞŵĞŶƚďƵƚŽŶĞǁŚĞƌĞƚŚĞƌĞŝƐƐƟůů
ǁŚŽŚĂǀĞǁĂƌŵĞĚƚŽ:ĂƉĂŶĞƐĞĞƋƵŝƟĞƐďĞĐĂƵƐĞ scope for further advances in return on equity
of his targeted reforms. ĂŶĚĚŝǀŝĚĞŶĚƐŝŶƉĂƌƟĐƵůĂƌ
• ,ƵŐĞŵŽŶĞƚĂƌLJƐƟŵƵůƵƐʹĂŶĚƚŚŝƐŝƐǁŚĞƌĞƚŚĞ
LEADERSHIP FIGHT Bank of Japan comes in
Nothing can be taken for granted in Japanese
ƉŽůŝƟĐƐ;ŽƌƐŽŝƚƐĞĞŵƐĂŶLJǁŚĞƌĞĞůƐĞƚŚĞƐĞĚĂLJƐͿ POLICY POSER
but Prime Minister Abe is expected to prevail in dŽƐƵƉƉŽƌƚďĞŶŽŵŝĐƐ͕ŚĞůƉ:ĂƉĂŶĐŽƉĞǁŝƚŚŝƚƐ
the LDP leadership poll, barring some grievous ϮϱϬйĚĞďƚͲƚŽͲ'WƌĂƟŽĂŶĚƚƌLJƚŽƐƚďŽƚŚ
ƐĞůĨͲŝŶŇŝĐƚĞĚǁŽƵŶĚ͘ ŐƌŽǁƚŚĂŶĚŝŶŇĂƟŽŶ͕ƚŚĞŽ:ŚĂƐƌƵŶƵůƚƌĂͲůŽŽƐĞ
dŚĞŽƉƉŽƐŝƟŽŶŽŶƉĂƉĞƌĚŽĞƐŶŽƚůŽŽŬƐƚƌŽŶŐ͕ monetary policy for two decades and more. But
not least because leading malcontents defected it has been taken to a new level by Governor
ƚŽƚŚĞƐŚŽƌƚͲůŝǀĞĚdŽŵŝŶ&ŝƌƐƚƉĂƌƚLJŽĨzƵƌŝŬŽ Haruhiko Kuroda.
<ŽŝŬĞ͕ŽŶůLJĨŽƌŝƚƚŽŝŵƉůŽĚĞŝŵŵĞĚŝĂƚĞůLJĂŌĞƌŚĞƌ Since October 2014, the BoJ has been buying
ĐƌƵƐŚŝŶŐĚĞĨĞĂƚŝŶƚŚĞϮϬϭϳ'ĞŶĞƌĂůůĞĐƟŽŶ͘ ¥80tr a year in Government bonds, real estate
ƚƚŚĞƟŵĞŽĨǁƌŝƟŶŐŚŝƐŽŶůLJĐŽŶĮƌŵĞĚ ŝŶǀĞƐƚŵĞŶƚƚƌƵƐƚƐ;:ͲZ/dƐͿĂŶĚĞƋƵŝƚLJĞdžĐŚĂŶŐĞͲ

36 | SHARES | 13 September 2018

 Insightful commentary on market issues
ƚƌĂĚĞĚĨƵŶĚƐ;d&ƐͿʹƚŚĂƚŝƐƚŚĞĞƋƵŝǀĂůĞŶƚŽĨ
άϱϱϬďŶĂLJĞĂƌ͕ŵŽƌĞƚŚĂŶƚŚĞĂŶŬŽĨŶŐůĂŶĚ
ŚĂƐĚŽŶĞŝŶYŝŶƚŽƚĂůƐŝŶĐĞŝƚƐƚĂƌƚĞĚǁŝƚŚŝƚƐ
scheme in 2009.
zĞƚŝŶŇĂƟŽŶŝƐƐƟůůŶŽƚĂƚƚŚĞŽ:͛ƐϮйƚĂƌŐĞƚ
ĂŶĚƚŚĞLJŝĞůĚŽŶƚŚĞŚĞĂĚůŝŶĞ:'ŝƐƐƚĂƌƟŶŐƚŽ
break out above the central bank’s intended
Ϭ͘ϭйĐĂƉ͕ŝŶĂĚŝƌĞĐƚƚŚƌĞĂƚƚŽŝƚƐŵŽŶĞƚĂƌLJ
authority.
JAPANESE BENCHMARK BOND YIELDS ARE
CREEPING HIGHER
Source: Thomson Reuters Datastream
dŚĞϭϬͲLJĞĂƌ:'ŵĂLJďĞĨĞĞůŝŶŐƚŚĞƐƚƌĂŝŶ
ĂƐ:ĂƉĂŶĞƐĞ'WƐƚĂƌƚƐŐƌŽǁŝŶŐĂŐĂŝŶ͕ĂŌĞƌĂ
ƐƚƵŵďůĞŝŶƚŚĞĮƌƐƚƋƵĂƌƚĞƌ͕ďƵƚĂůƐŽďĞĐĂƵƐĞ
ƚŚĞƌĞĂƌĞƐƵŐŐĞƐƟŽŶƐƚŚĂƚƚŚĞŽ:ŝƐƐƚĂƌƟŶŐƚŽ
ƐƚĞĂůƚŚŝůLJƚĂƉĞƌʹŽƌĐƵƚďĂĐŬŽŶʹŝƚƐYYƐĐŚĞŵĞ͕ global share prices.
either because it wants to, or because it has to
do so.
Ž:ĂƐƐĞƚƐĂůƌĞĂĚLJƌĞƉƌĞƐĞŶƚŵŽƌĞƚŚĂŶϵϬй
ŽĨ'W͕ĐŽŵƉĂƌĞĚƚŽϮϰйŽĨ'WĨŽƌƚŚĞĂŶŬ
ŽĨŶŐůĂŶĚŝŶƚŚĞh<ĂŶĚϮϬйĨŽƌƚŚĞ&ĞĚĞƌĂů
ZĞƐĞƌǀĞŝŶƚŚĞh^͘
BANK OF JAPAN BALANCE SHEET CONTINUES
TO EXPAND THANKS TO ITS QQE SCHEME
Source: Bank of Japan; FRED – St. Louis Federal
Reserve database; Thomson Reuters Datastream
AEQUITAS
ůƚŚŽƵŐŚƚĂƉĞƌŝŶŐĂŶĚŶŽǁǁŝƚŚĚƌĂǁĂůŽĨY
ďLJƚŚĞh^&ĞĚĞƌĂůZĞƐĞƌǀĞŚĂƐŶŽƚŬŶŽĐŬĞĚƚŚĞ
h^ƐƚŽĐŬŵĂƌŬĞƚŽīŝƚƐƉĂƚŚ͕ŽŶĞƌĞĂƐŽŶŵĂLJ
ŚĂǀĞďĞĞŶƚŚĞŽ:;ĂŶĚƵƌŽƉĞĂŶĞŶƚƌĂůĂŶŬͿ
ƐƚĞƉƉĞĚƵƉĂŶĚƉŽƵƌĞĚŽŶƉŽůŝĐLJƐƟŵƵůƵƐũƵƐƚĂƐ
the Americans stopped.
ƵƚĞǀĞŶĂŵŽĚĞƐƚǁŝƚŚĚƌĂǁĂůŽĨYĂŶĚ
ůŝƋƵŝĚŝƚLJďLJƚŚĞh^ŚĂƐĐĂƵƐĞĚĐŚĂŽƐŝŶĞŵĞƌŐŝŶŐ
ŵĂƌŬĞƚƐ͕ǁŚĞƌĞĐƵƌƌĞŶĐŝĞƐƐƵĐŚĂƐƚŚĞƌŐĞŶƟŶĞ
ƉĞƐŽ͕/ŶĚŝĂŶƌƵƉĞĞĂŶĚZƵƐƐŝĂŶƌŽƵďůĞŚĂǀĞ
all cratered.
/Ĩ:ĂƉĂŶƐƚĂƌƚƐƚŽƚĂƉĞƌYƚŚĞŶĂŶŽƚŚĞƌƐŽƵƌĐĞ
of cheap cash will start to dry up, especially as
ƚŚĞƉůĂŶƐƚŽƐƚŽƉĂĚĚŝŶŐƚŽŝƚƐYƉƌŽŐƌĂŵŵĞ
ŝŶĞĐĞŵďĞƌ͘dŚĂƚĐŽƵůĚŚĂǀĞǁŝĚĞƌŝŵƉůŝĐĂƟŽŶƐ
ƚŚĂŶǁĞƌĞĂůŝƐĞ͕ůŽŽŬŝŶŐĂƚƚŚŝƐĮŶĂůĐŚĂƌƚ͕ǁŚŝĐŚ
ƐŚŽǁƐŚŽǁŐƌŽǁƚŚŝŶƚŚĞĂƐƐĞƚƐŽĨƚŚĞǁŽƌůĚ͛ƐĮǀĞ
ůĞĂĚŝŶŐYƉƌŽƉŽŶĞŶƚƐŵĂLJŚĂǀĞŚĞůƉĞĚƚŽŐŽŽƐĞ
GROWTH IN GLOBAL CENTRAL BANK ASSETS
>KK<^WK/^dK^>KtsZzZW/>zΈsE
&KZ:WEKEdDW>d^dWZ/E'YYΉ
Source: Bank of England; Bank of Japan; FRED – St. Louis
&ĞĚĞƌĂůZĞƐĞƌǀĞĚĂƚĂďĂƐĞ͖^ǁŝƐƐEĂƟŽŶĂůĂŶŬ͖dŚŽŵƐŽŶ
Reuters Datastream; US Federal Reserve
So while the BoJ is not expected to make any
ĚƌĂŵĂƟĐĐŚĂŶŐĞƐƚŚŝƐŵŽŶƚŚ͕ŝŶǀĞƐƚŽƌƐŵĂLJŶĞĞĚ
to check any subtle changes in Governor Kuroda’s
scripts, whether they have direct exposure to
Japan or not.
13 September 2018 | SHARES | 37
 TALKING POINT Our views on topical issues

Understanding liquidity and

why it matters to buying and
selling investments
You can’t always get what you want with certain stocks and funds
iquidity is one of those

L investment words
which sounds rather too
vague and complex to really
worry about. Yet liquidity can
determine whether you make a
ƉƌŽĮƚŽƌůŽƐƐŽŶĂŶŝŶǀĞƐƚŵĞŶƚ
and, crucially, whether or not
you can get your hands on your
money when you want it.
In plain English, liquidity is
about being able to buy or sell
an investment when you want,
in the amount you want, at the
price you want.
If an investment is deemed
to be illiquid it could mean you where to allocate your money. dŚĞĚŽǁŶƐŝĚĞŽĨƚŚŝƐƐŝƚƵĂƟŽŶ
aren’t able to put your money Smaller companies, for is that the price can change while
into it when you would like or, example, tend to have fewer LJŽƵĂƌĞǁĂŝƟŶŐ͕ŵĞĂŶŝŶŐLJŽƵ
perhaps more importantly, get people trading their shares, could end up paying more than
your money out. ƉĂƌƟĐƵůĂƌůLJƚŚĞǀĞƌLJƐŵĂůů you want to buy or selling for less
Why does this happen? businesses. That means when than you had hoped.
Because there are not always you want to buy or sell some of
the same number of buyers and the stock it could take longer to THE PERILS OF LIQUIDITY
sellers in the market. ĮŶĚƐŽŵĞŽŶĞƚŽƚĂŬĞƚŚĞŽƚŚĞƌ Russ Mould, investment director
side of the trade than, say, a at AJ Bell, says: ‘There will
SUPPLY AND DEMAND ISSUES FTSE 100 company. (nearly) always be a trade to be
Think of it like going into the done but in a panic, it may be at

supermarket to buy three loaves
ŽĨďƌĞĂĚĂŶĚĮŶĚŝŶŐƚŚĞƌĞŝƐŽŶůLJ
one for sale. There’s nothing
you can do about it, you just
ŚĂǀĞƚŽǁĂŝƚƵŶƟůŵŽƌĞďĞĐŽŵĞ
available. On the other side of
the trade, it’s like having an item
to sell that no one wants.
WĂƌƟĐƵůĂƌƚLJƉĞƐŽĨŝŶǀĞƐƚŵĞŶƚ
are more prone to illiquidity
than others and it’s an important
ĐŽŶƐŝĚĞƌĂƟŽŶǁŚĞŶĐŚŽŽƐŝŶŐ
“
“
There will (nearly)
always be a trade
to be done but in a
panic, it may be at
a price that is a lot
lower than you u want
a price that is a lot lower than
you want. Liquidity is never there
when you really need it, so you
should never depend on it.
‘This is why it’s best to invest
in things for the long-term
and because you believe they
are fundamentally strong and
ĂƩƌĂĐƟǀĞůLJƉƌŝĐĞĚ͕ŶŽƚũƵƐƚ
because you think shares will go
up and you can quickly sell them
to someone else.’

38 | SHARES | 13 September 2018


Property is a prime example
of an illiquid asset – while a
company share might take a few
ĚĂLJƐƚŽŽŋŽĂĚ͕ĂƉƌŽƉĞƌƚLJĐĂŶ
take months or even years to sell.
The consequences of this
ǁĞƌĞĨĞůƚĂƌŽƵŶĚƚŚĞĮŶĂŶĐŝĂů
ĐƌŝƐŝƐŝŶϮϬϬϴĂŶĚĂŐĂŝŶĂŌĞƌ
the EU referendum in 2016
when property funds suspended
ƚƌĂĚŝŶŐ͕ƉƌĞǀĞŶƟŶŐĂŶLJŝŶǀĞƐƚŽƌƐ
from buying or selling units in
various funds.
Fund managers were worried
that so many people would try
and sell units in property funds
that they would be forced into
ĂĮƌĞͲƐĂůĞŽĨƚŚĞŝƌĂƐƐĞƚƐũƵƐƚƚŽ
ŵĞĞƚŝŶǀĞƐƚŽƌƌĞĚĞŵƉƟŽŶƐ͘
For this reason, investment
ƚƌƵƐƚƐĂƌĞŽŌĞŶǀŝĞǁĞĚĂƐĂ
less risky way to access illiquid
investments. While their share
price may fall, they won’t
suspend trading and a manager
won’t be forced to sell their
assets because there are a set
number of shares in issue, unlike
funds where units are created
and disposed of depending
on demand.
In the property turmoil, for
example, property investment
ƚƌƵƐƚƐĐŽŶƟŶƵĞĚƚƌĂĚŝŶŐʹ
investors may have had to endure
a share price plummet but they
could sell if they wanted to.
THE FUND MANAGER’S VIEW
As fund manager of Miton
UK MicroCap Trust (MINI),
Gervais Williams is well versed
with the challenges of liquidity.
His investment trust focuses
on businesses with a market
ĐĂƉŝƚĂůŝƐĂƟŽŶŽĨάϭϱϬŵŽƌůĞƐƐ
(to put that into context, the
market cap of companies on the
FTSE 100 ranges from Rightmove
(RMV) Ăƚάϰ͘ϰďŶƚŽRoyal Dutch
Shell (RDSB)ĂƚάϮϬϰ͘ϲďŶͿ͘
ĞĐĂƵƐĞŝŶǀĞƐƟŶŐŝŶƚŚĞ
smaller end of the market brings
illiquidity risk, Williams invests in
a greater number of companies
than other funds might typically
hold, with at least 100 stocks in
ƚŚĞƉŽƌƞŽůŝŽ͘,ĞƐĂLJƐǁŚĞŶƚŚĞƌĞ
ŝƐĂŵĂƌŬĞƚƐĞůůͲŽīŝƚĐĂŶƚĂŬĞ
several weeks to complete a
‘sell’ order.
‘Liquidity is always a
TALKING POINT
ĐŽŶƐŝĚĞƌĂƟŽŶĂŶĚƚŚĞƌĞĂƌĞ
some companies whose shares
hardly ever trade, so you have
ƚŽďĞĐŽŶĮĚĞŶƚĂŶĚƵŶĚĞƌƐƚĂŶĚ
it will take longer to get out of
ƚŚŽƐĞƉŽƐŝƟŽŶƐ͘zŽƵŶĞĞĚƚŽ
balance those risks by having a
ǁĞůůͲƐƉƌĞĂĚƉŽƌƞŽůŝŽ͕͛ŚĞĂĚĚƐ͘
‘In the most extreme cases, it
can take several months to buy
or sell shares. We are ok with
that because we are long-term
investors and know that we
also have investments we can
liquidate within a couple of days
if we need to.’
OTHER ISSUES TO CONSIDER
WITH LLIQUIDITY
Williams says illiquidity can also
be your friend. He explains that
ƐŵĂůůĞƌĐŽŵƉĂŶŝĞƐĐĂŶŽŌĞŶ
prove more resilient when there
is a market shock precisely
ďĞĐĂƵƐĞƚŚĞLJĂƌĞĚŝĸĐƵůƚƚŽƐĞůů͕
whereas it is very easy to trade
large-cap stocks so investors can
easily dump these shares.
tŚŝůĞůŝƋƵŝĚŝƚLJŝƐŽŌĞŶƚĂůŬĞĚ
about in the context of not being
ĂďůĞƚŽŽŋŽĂĚĂŶŝŶǀĞƐƚŵĞŶƚ͕
it can also stop you accessing
an asset if it is in demand and
there is a lack of sellers. In this
instance investors may have to
wait to invest or be forced to pay
a premium for the asset.
A recent example of this
ƐŝƚƵĂƟŽŶŝƐŝŶĨƌĂƐƚƌƵĐƚƵƌĞ
investment trusts, many of
which have traded at double-
digit premiums in recent years
because investors have been
ĂƩƌĂĐƚĞĚďLJƚŚĞƌĞůŝĂďůĞ͕ŚŝŐŚͲ
income they pay. Other illiquid
asset classes which have been
popular in recent years include
private equity and specialist
assets such as renewable
energy. (HB)
13 September 2018 | SHARES | 39
 EDUCATION
Create your own simple
share price target
Having a medium-term goal for a stock can act as a focal point for your
investment process
I nvestors buy shares in the
ŚŽƉĞƚŚĞLJƌŝƐĞŽǀĞƌƟŵĞĂŶĚ
ĐƌĞĂƚĞǀĂůƵĞ͘dŚĞƋƵĞƐƟŽŶ
ŝƐ͕ďLJŚŽǁŵƵĐŚƐŚŽƵůĚĂƐŚĂƌĞ
ƌŝƐĞ͕ĂŶĚŽǀĞƌǁŚĂƚƟŵĞĨƌĂŵĞ͕
ƚŽƋƵĂůŝĨLJĂƐĂƐƵĐĐĞƐƐĨƵů
ŝŶǀĞƐƚŵĞŶƚ͍
&ŽƌƐŽŵĞŝŶǀĞƐƚŽƌƐ
earning a 10% return in six
ŵŽŶƚŚƐǁŽƵůĚďĞĂĚĞĐĞŶƚ
ƌĞƐƵůƚ͘KƚŚĞƌƐŵĂLJŚĂǀĞŵŽƌĞ
ĂŐŐƌĞƐƐŝǀĞĂŵďŝƟŽŶƐ͕ƉĞƌŚĂƉƐ
ϱϬйŽŶĂϭϮƚŽϮϰŵŽŶƚŚǀŝĞǁ͘
There is no right or wrong
ĂŶƐǁĞƌĂƐǁĞĞĂĐŚŚĂǀĞƚŽĐŽŵĞ
ƚŽŽƵƌŽǁŶĐŽŶĐůƵƐŝŽŶƐƌĞŐĂƌĚŝŶŐ
ĞdžƉĞĐƚĂƟŽŶƐ͘
Using absolute share price
ƉĞƌĐĞŶƚĂŐĞƉĞƌĨŽƌŵĂŶĐĞŝƐĂŶ
ĂƌŐƵĂďůĞŵĞĂƐƵƌĞ͕ĂůďĞŝƚƉĞƌŚĂƉƐ
ƚŚĞƵůƟŵĂƚĞĂƌďŝƚĞƌ͕ƐŝŶĐĞĂƐƚŽĐŬ
ƉƌŝĐĞĂƚĂŶLJŵŽŵĞŶƚŝŶƟŵĞ
ƌĞĂůůLJƌĞŇĞĐƚƐŵĂƌŬĞƚƐĞŶƟŵĞŶƚ͕
ŽƌŚŽǁŝŶǀĞƐƚŽƌƐ͚ĨĞĞů͛ĂďŽƵƚĂ
ĐŽŵƉĂŶLJ͛ƐƉƌŽƐƉĞĐƚƐ͘
ƐLJŽƵŵĂLJŚĂǀĞĞdžƉĞƌŝĞŶĐĞĚ
LJŽƵƌƐĞůǀĞƐ͕ƚŚĞŵĂƌŬĞƚ͛ƐŵŽŽĚ
40 | SHARES | 13 September 2018
ĐĂŶĐŚĂŶŐĞŽŶĂƌĞůĂƟǀĞǁŚŝŵ
ĞǀĞŶŝĨĨŽƌĞĐĂƐƚƌĞǀĞŶƵĞƐ͕
ƉƌŽĮƚĂŶĚĐĂƐŚŇŽǁĚŽŶŽƚ
ĚƌĂŵĂƟĐĂůůLJĐŚĂŶŐĞ͘
This is where a share price
ƚĂƌŐĞƚĐĂŶĮƚŝŶ͘dŚĞƐĞĂƌĞ
ƐƵďũĞĐƟǀĞĐĂůĐƵůĂƟŽŶƐĂŶĚ
ƉĞƌŚĂƉƐďĞĐĂƵƐĞŽĨƚŚĂƚŵĂŶLJ
ŝŶǀĞƐƚŽƌƐĂƌĞĨĂŝƌůLJƐĐĞƉƟĐĂů
about their value. But they can
ĂĐƚĂƐůŽŽƐĞŐŽĂůĂƌŽƵŶĚǁŚŝĐŚ
LJŽƵƌŚŽƉĞƐĂŶĚĞdžƉĞĐƚĂƟŽŶƐ
can coalesce.
A share price target can be
ĨŽƵŶĚŽŶŵŽƐƚĂŶĂůLJƐƚƌĞƐĞĂƌĐŚ
ŶŽƚĞƐ;ĂůƚŚŽƵŐŚŶŽƚĂůůͿĂŶĚ
they typically signal what
ĂŶĂůLJƐƚƐƚŚŝŶŬŝƐĂƌĞĂƐŽŶĂďůĞ
ĚĞƐƟŶĂƟŽŶĨŽƌĂƐŚĂƌĞƉƌŝĐĞŽŶ
ƚŚĞĂƐƐƵŵƉƟŽŶƚŚĂƚĐƵƌƌĞŶƚ
ĞdžƉĞĐƚĂƟŽŶƐĂƌĞŵĞƚ͘
WƵďůŝĐĂƟŽŶŽĨƚŚĞƐĞƚĂƌŐĞƚƐ
ŚĂǀĞƚŚĞƉŽǁĞƌƚŽŵŽǀĞƐŚĂƌĞ
ƉƌŝĐĞƐ͘:ƵƐƚůĂƐƚǁĞĞŬĂŶĂůLJƐƚƐ
Ăƚ>ŝďĞƌƵŵĐƵƚƚŚĞŝƌƐŚĂƌĞƉƌŝĐĞ
ƚĂƌŐĞƚŽŶĞŶŐŝŶĞĞƌŝŶŐĮƌŵIMI
(IMI) ďLJϮϬй͕ĨƌŽŵάϭϮ͘ϳϱƚŽ
άϭϬ͘ϮϬ͘^ůŽǁŝŶŐŐƌŽǁƚŚĂŶĚŇĂƚ
ŵĂƌŐŝŶƐǁĞƌĞďĞŚŝŶĚƚŚĞĐŚĂŶŐĞ͘
/D/ƐŚĂƌĞƐŚĂǀĞƐŝŶĐĞƐůŝƉƉĞĚ
6.5% to £11.25, not huge but
ƌĞǀĞƌƐŝŶŐƚŚĞƉĂƐƚĨĞǁǁĞĞŬƐ
ŽĨƐŚĂƌĞƉƌŝĐĞƐƚƌĞŶŐƚŚĨŽƌƚŚĞ
ĐŽŵƉĂŶLJ͘
DIFFERENT STROKES,
DIFFERENT FOLKS
dŚĞƌĞĂƌĞĂŶƵŵďĞƌŽĨǀĂůƵĂƟŽŶ
ŵĞƚŚŽĚŽůŽŐŝĞƐƵƐĞĚŝŶ
establishing a share price target,
ƐŽŵĞƌĞůĂƟǀĞůLJƐƚƌĂŝŐŚƚͲĨŽƌǁĂƌĚ
ůŝŬĞƚŚĞĞŶƚĞƌƉƌŝƐĞǀĂůƵĞͲƚŽͲ
ĞĂƌŶŝŶŐƐďĞĨŽƌĞŝŶƚĞƌĞƐƚ͕ƚĂdž͕
ĚĞƉƌĞĐŝĂƟŽŶĂŶĚĂŵŽƌƟƐĂƟŽŶ
;sͬ/dͿ͘KƚŚĞƌƐĂƌĞŵŽƌĞ
ĐŽŵƉůĞdž͕ƐƵĐŚĂƐƚŚĞĨĂŝƌůLJ
ĐŽŵŵŽŶĚŝƐĐŽƵŶƚĞĚĐĂƐŚ
ŇŽǁ;&Ϳ͘
ƵƚŵŽƐƚŝŶǀĞƐƚŽƌƐƚĞŶĚƚŽƵƐĞ
ƉƌŝĐĞƚŽĞĂƌŶŝŶŐƐ͕ŽƌWĨŽƌƐŚŽƌƚ͘
dŚĞLJĂƌĞƵƐƵĂůůLJƐĞƚĂƌŽƵŶĚĂ
ϭϮƚŽϭϴŵŽŶƚŚƟŵĞĨƌĂŵĞ͕ďƵƚ
ĐĂŶďĞůŽŶŐĞƌŽƌƐŚŽƌƚĞƌͲƚĞƌŵ
ĚĞƉĞŶĚŝŶŐŽŶƚŚĞƐƚŽĐŬ͘

We now show you how
to set your own share price
ƚĂƌŐĞƚďĂƐĞĚŽŶƐŽŵĞǀĞƌLJ
ƐŝŵƉůĞƐƵŵƐ͘
KŶĞǁĂLJĂŶĂůLJƐƚƐ;ĂŶĚ
ũŽƵƌŶĂůŝƐƚƐͿŽŌĞŶƐƵŵŵĂƌŝƐĞ
ĂƐƚŽĐŬ͛ƐǀĂůƵĂƟŽŶƚƌĂũĞĐƚŽƌLJ
ŝƐƚŽĞdžƉůĂŝŶŚŽǁĂĨŽƌǁĂƌĚW
ĚĞĐůŝŶĞƐŽǀĞƌƟŵĞ͘&ŽƌĞdžĂŵƉůĞ͕
ůĞƚ͛ƐĂƐƐƵŵĞdĞƐƚŽŵƉĂŶLJƉůĐ͛Ɛ
ƐŚĂƌĞƉƌŝĐĞŝƐϭϱϬƉĂŶĚƚŚĞ
ĐŽŵƉĂŶLJŝƐĨŽƌĞĐĂƐƚƚŽĚĞůŝǀĞƌ
ĞĂƌŶŝŶŐƐƉĞƌƐŚĂƌĞŽĨϭϬƉŝŶƚŚĞ
ĐƵƌƌĞŶƚϭϮŵŽŶƚŚƐ͘
>Ğƚ͛ƐĂůƐŽĂƐƐƵŵĞĂŶĂůLJƐƚƐ
ƉƌĞĚŝĐƚƐƚĞĂĚLJŐƌŽǁƚŚŽĨϭϱй
ŽǀĞƌƚŚĞŶĞdžƚĨĞǁLJĞĂƌƐ͘
KŶƚŚŝƐƐŝŵƉůĞďĂƐŝƐ͕
ϭϬƉW^ƚŚŝƐLJĞĂƌǁŽƵůĚƌŝƐĞ
ƚŽϭϭ͘ϱƉŝŶĨŽƌǁĂƌĚLJĞĂƌŽŶĞ͕
ĂŶĚŝŶĐƌĞĂƐĞĂŐĂŝŶƚŽϭϯ͘ϮƉŝŶ
ĨŽƌǁĂƌĚLJĞĂƌƚǁŽ͕ĂŶĚϭϱ͘ϮƉŝŶ
ĨŽƌǁĂƌĚLJĞĂƌƚŚƌĞĞ͘
dŚŝƐŵŝŐŚƚďĞĞdžƉůĂŝŶĞĚ
ƐŽŵĞƚŚŝŶŐůŝŬĞʹ͚ƚŚŝƐǁŽƵůĚ
ŵĞĂŶƚŚĂƚƚŚĞWĨĂůůƐĨƌŽŵƚŚĞ
ĐƵƌƌĞŶƚϭϱƚŽϭϯŶĞdžƚLJĞĂƌ͕ƚŽ
ϭϭ͘ϰŝŶLJĞĂƌƚǁŽĂŶĚƚŽϵ͘ϵŝŶ
ĨŽƌǁĂƌĚLJĞĂƌƚŚƌĞĞ͛͘
ƵƚLJŽƵĐĂŶŇŝƉƚŚĂƚĂƌŽƵŶĚ
ĂŶĚĐƌĞĂƚĞĂƐŚĂƌĞƉƌŝĐĞƚĂƌŐĞƚ͘
^ŝŶĐĞƚŚĞƐŚĂƌĞƉƌŝĐĞƐŚŽƵůĚ
ŵŽǀĞŚŝŐŚĞƌƚŽƌĞŇĞĐƚƌŝƐŝŶŐ
earnings it is not unreasonable to
ƚŚŝŶŬƚŚĂƚƚŚĞWŵŝŐŚƚƌĞŵĂŝŶĂƚ
ůĞĂƐƚƐƚĂďůĞĂƚϭϱͲƟŵĞƐŽǀĞƌƚŚĞ
next two years.
^ŽůĞƚ͛ƐƌŽůůƚŚĂƚĐĂůĐƵůĂƟŽŶ
ĨŽƌǁĂƌĚĂŶĚǁŽƌŬŝƚŽƵƚ͘
As the table shows, the
CURRENT
zZ
EPS 10p
Share price* 150p
Ύ/ŵƉůŝĞƐWƐƚĂLJƐĂƚϭϱ
ŝŵƉůŝĞĚƉŽƚĞŶƟĂůƐŚĂƌĞƉƌŝĐĞ
ƌĞƚƵƌŶƐĂƌĞŝŵƉƌĞƐƐŝǀĞ͘'ŝǀĞŶ
ƚŚĂƚƚŚĞŵĂƌŬĞƚůŽŽŬƐĨŽƌǁĂƌĚ͕
ŽƵƌďĂĐŬŽĨĞŶǀĞůŽƉĞƐƵŵƐ
ƐƵŐŐĞƐƚƐŽŵĞƚŚŝŶŐůŝŬĞϱϬй
ƐŚĂƌĞƉƌŝĐĞƵƉƐŝĚĞŝƐƋƵŝƚĞ
ƉŽƐƐŝďůĞďLJƚŚĞƟŵĞǁĞŐĞƚ
ƚŽǁĂƌĚƐƚŚĞĞŶĚŽĨĨŽƌǁĂƌĚ
year three.
/ŶƐŽŵĞĐĂƐĞƐ͕ƐƵĐŚƐƚĞĂĚLJ
ŐƌŽǁƚŚŵŝŐŚƚĂůƐŽũƵƐƟĨLJĂ
ŚŝŐŚĞƌWƌĂƟŶŐƚŚĂŶϭϱ͘/Ŷ
ŽƵƌƐŝŵƉůĞĞdžĂŵƉůĞĂƌĞͲƌĂƟŶŐ
ƚŽĂWŽĨϭϴďLJĨŽƌǁĂƌĚLJĞĂƌ
ƚŚƌĞĞĐŽƵůĚŝŵƉůLJĞdžƚƌĂƵƉƐŝĚĞ
ƚŽϮϳϯ͘ϲƉ͘^ŝŵŝůĂƌůLJ͕ŝĨĞĂƌŶŝŶŐƐ
ŐƌŽǁƚŚǁĂƐƚŽƐƉĞĞĚƵƉ;Žƌ
ƐůŽǁĚŽǁŶͿLJŽƵĂƌĞŝŶĂƉŽƐŝƟŽŶ
to recalculate your share price
ƚĂƌŐĞƚĂĐĐŽƌĚŝŶŐůLJ͘
READING BETWEEN THE LINES
/ŵƉŽƌƚĂŶƚůLJ͕ĚŽŝŶŐLJŽƵƌŽǁŶ
FORWARD FORWARD FORWARD
zZKE zZdtK zZd,Z ƚŚĞƐƚŽĐŬŝƐƚŚĞƌŝŐŚƚƚŚŝŶŐƚŽ
11.5p ϭϯ͘ϮƉ 15.2p
ϭϳϮ͘ϱƉ ϭϵϴƉ 228p
EDUCATION
ƐƵŵƐŵĞĂŶƐLJŽƵĐĂŶƌĞĂĚ
ďĞƚǁĞĞŶƚŚĞůŝŶĞƐŽĨǁŚĂƚĂ
ĐŽŵƉĂŶLJŝƐƐĂLJŝŶŐĂŶĚũƵĚŐĞ
ǁŚĞƚŚĞƌĐƵƌƌĞŶƚĨŽƌĞĐĂƐƚƐĂƌĞ
ƉŝƚĐŚĞĚƚŽŽŚŝŐŚŽƌůŽǁ͕ĂŶĚ
ĂĐĐŽŵŵŽĚĂƚĞƚŚŝƐŝŶLJŽƵƌŽǁŶ
share price target.
ůŽƵĚͲďĂƐĞĚĐŽŵŵƵŶŝĐĂƟŽŶƐ
ƚĞĐŚŶŽůŽŐLJĐŽŵƉĂŶLJGamma
ŽŵŵƵŶŝĐĂƟŽŶƐ;'D͗/DͿ
ŝƐĂŐŽŽĚĞdžĂŵƉůĞŽĨŵĂŶĂŐŝŶŐ
ŵĂƌŬĞƚĞdžƉĞĐƚĂƟŽŶƐƚŽƚŚĞ
ƉŽŝŶƚǁŚĞƌĞŝƚĨƌĞƋƵĞŶƚůLJďĞĂƚƐ
ĨŽƌĞĐĂƐƚƐ͘>ŝƩůĞ/dƉƌŽũĞĐƚƐĮƌŵ
^Đŝ^LJƐ;^^z͗/DͿ is another
ĞdžĂŵƉůĞŽĨƚŚŝƐŚĂďŝƚ͘
ƵƚďĞǁĂƌĞ͕ŵĂŶLJŝŶǀĞƐƚŽƌƐ
ďĞůŝĞǀĞƚŚĂƚŚŝƫŶŐĂƚĂƌŐĞƚ
ƉƌŝĐĞŝƐĂƚƌŝŐŐĞƌƚŽƐĞůůĂƐƚŽĐŬ͘
tĞƚŚŝŶŬƚŚŝƐŝƐĂĐŽĐŬͲĞLJĞĚ
ĂƉƉƌŽĂĐŚ͘/ŶƐƚĞĂĚ͕ǁĞƐƵŐŐĞƐƚ
ƚŚĂƚĂƩĂŝŶŝŶŐĂƉƌĞĚĞƚĞƌŵŝŶĞĚ
ƐŚĂƌĞƉƌŝĐĞŝƐƚŚĞƟŵĞƚŽ
ƌĞĂƐƐĞƐƐƚŚĞŝŶǀĞƐƚŵĞŶƚĐĂƐĞ͘
zŽƵŵŝŐŚƚĚĞĐŝĚĞƚŚĂƚƐĞůůŝŶŐ
ĚŽ͘zŽƵŵŝŐŚƚĞƋƵĂůůLJĞŶĚƵƉ
ƚŚŝŶŬŝŶŐƚŚĂƚƉƌŽŐƌĞƐƐŚĂƐŵŽǀĞĚ
ƐƵĸĐŝĞŶƚůLJĨŽƌǁĂƌĚƚŽũƵƐƟĨLJ
ƌĞƚĂŝŶŝŶŐƚŚĞƐƚŽĐŬĨŽƌĨƵƚƵƌĞ
ƵƉƐŝĚĞ͘dŚĞƌĞ͛ƐŶŽŽŶĞƐŝnjĞĮƚƐĂůů
ĂŶƐǁĞƌ͖ŝƚƐŚŽƵůĚďĞďĂůĂŶĐĞĚŽŶ
ĂĐĂƐĞͲďLJͲĐĂƐĞďĂƐŝƐ͘;^&Ϳ
13 September 2018 | SHARES | 41
 UNDER THE BONNET
Amigo Loans distances
itself from Wonga in bid
to gain investor interest
The loan company recently joined the stock market and has a fairly cheap rating
T he summer stock market
ŇŽĂƚŽĨAmigo (AMGO)
brought the UK’s best
known guarantor loan company
to the London Stock Exchange
ǁŝƚŚĂŵĂƌŬĞƚĐĂƉŽĨάϭ͘ϯďŶ͘
'ŝǀĞŶƚŚĞƚƌŽƵďůĞŽĨƐŽŵĞ
companies in the sub-prime
lending sector, notably Wonga, it
ŝƐǁŽƌƚŚĂƐŬŝŶŐŝĨĂůůĐŽŵƉĂŶŝĞƐŝŶ
this bracket, including Amigo, can
be tarred with the same brush?
ŵŝŐŽ͛ƐĐŚŝĞĨĞdžĞĐƵƟǀĞ
'ůĞŶŶƌĂǁĨŽƌĚŝƐƋƵŝĐŬƚŽ
dismiss comparisons with
payday lenders like Wonga, who
ŚĂǀĞĨĂůůĞŶĨŽƵůŽĨƌĞŐƵůĂƚŽƌLJ
ƐĐƌƵƟŶLJŝŶƌĞĐĞŶƚLJĞĂƌƐ͚͘tĞ
ĂƌĞĂǀĞƌLJĚŝīĞƌĞŶƚďƵƐŝŶĞƐƐ
to Wonga and there’s no read
across to what’s happening to
ƚŚĞŵ͕͛ƐĂLJƐƌĂǁĨŽƌĚ͘
Wonga was rocked by a series
ŽĨĐŽŵƉĞŶƐĂƟŽŶĐůĂŝŵƐŽǀĞƌ
ŝŵƉƌŽƉĞƌƐĂůĞƐƉƌĂĐƟĐĞƐĂŶĚŝƚƐ
ĐƵƐƚŽŵĞƌƐĂƌĞƚŚŽƵŐŚƚƚŽƐƟůů
ŽǁĞƚŚĞĐŽŵƉĂŶLJĂƌŽƵŶĚάϰϬϬŵ
ĚĞƐƉŝƚĞŝƚďĞŝŶŐŝŶĂĚŵŝŶŝƐƚƌĂƟŽŶ͘
Amigo argues it does not have
these problems as it targets a
ĚŝīĞƌĞŶƚƉĂƌƚŽĨƚŚĞŵĂƌŬĞƚ͘
WHO IS ITS TARGET
CUSTOMER?
Described as a non-standard
ůĞŶĚĞƌ͕ŵŝŐŽ͛ƐƌĂƚĞŽĨŝŶƚĞƌĞƐƚ
or APR is the middle ground
between mainstream lenders and
ŚĂůĨŽĨǁŚĂƚƐƵďͲƉƌŝŵĞůĞŶĚĞƌƐ
42 | SHARES | 13 September 2018
We explain what this company does
are allowed to charge since
ƌĞĨŽƌŵƐǁĞƌĞŝŶƚƌŽĚƵĐĞĚŝŶϮϬϭϱ͘
ƚϱϬйWZ͕ƚŚĞůŽĂŶƐĂƌĞďLJ
ŶŽŵĞĂŶƐĐŚĞĂƉďƵƚƐƟůůĂůŽŶŐ
ǁĂLJŽīƚŚĞϭϬϬйƚŚĂƚŝƐŶŽǁƚŚĞ
maximum a short term lender
ĐĂŶĐŚĂƌŐĞ͘
The company works by giving
ƚŚŽƐĞĞdžĐůƵĚĞĚĨƌŽŵŵĂŝŶƐƚƌĞĂŵ
ůĞŶĚĞƌƐĂĐĐĞƐƐƚŽĐƌĞĚŝƚ͘dŚĞĐĂƚĐŚ
is that they need someone with a
ďĞƩĞƌĐƌĞĚŝƚŚŝƐƚŽƌLJƚŽŐƵĂƌĂŶƚĞĞ
ƚŚĞůŽĂŶƌĞƉĂLJŵĞŶƚƐǁŝůůďĞƉĂŝĚ͘
These guarantors will typically be
ĂĨƌŝĞŶĚŽƌĨĂŵŝůLJŵĞŵďĞƌ͘
ƌĂǁĨŽƌĚƐĂLJƐƚŚŝƐŝƐŽŶůLJƉĂƌƚ
ŽĨƚŚĞƐƚŽƌLJĂƐĚĞďƚĐŽŶƐŽůŝĚĂƟŽŶ
is another reason people use
ŵŝŐŽ͘,ĞƐƚĂƚĞƐƚŚĂƚĂƋƵĂƌƚĞƌ
ŽĨŝƚƐŵŽŶƚŚůLJůĞŶĚŝŶŐŝƐƚŽĂůůŽǁ
people to consolidate more
ĐŽƐƚůLJĚĞďƚƐ͘
Amigo also caps the interest it
ĐŚĂƌŐĞƐ͕ƐŽŝĨĂĐƵƐƚŽŵĞƌŐĞƚƐŝŶƚŽ
trouble they don’t get sucked into
a spiralling debt vortex, the so-
ĐĂůůĞĚ͚ƉĂLJĚĂLJƚƌĂƉ͛͘
ƌĂǁĨŽƌĚƐĂLJƐĂŶƵŵďĞƌŽĨƚŚĞ
company’s customers have been
prime borrowers in the past but
Ă͚ďĂĚĞǀĞŶƚ͛ŚĂƉƉĞŶĞĚƚŽƚŚĞŵ
ƐƵĐŚĂƐƌĞůĂƟŽŶƐŚŝƉďƌĞĂŬĚŽǁŶ
ŽƌůŽƐƐŽĨũŽďƐĞǀĞƌĞůLJůŝŵŝƟŶŐ
ƚŚĞŝƌŽƉƟŽŶƐĂŶĚĂīĞĐƟŶŐƚŚĞŝƌ
ĐƌĞĚŝƚƐƚĂƚƵƐ͘
͚tĞĂƌĞĂĐƌĞĚŝƚƌĞŚĂďŝůŝƚĂƟŽŶ
company and want to help
rebuild credit scores and we don’t
ĚŝƐĐŽƵƌĂŐĞƉĞŽƉůĞĨƌŽŵŵŽǀŝŶŐ
ĂǁĂLJĨƌŽŵƵƐ͕͛ƐĂLJƐƌĂǁĨŽƌĚ͘
ǀĞŶŝĨĐƵƐƚŽŵĞƌƐĚŽŐƌĂĚƵĂƚĞ
ĨƌŽŵŵŝŐŽƚŽŵŽƌĞŵĂŝŶƐƚƌĞĂŵ
ůĞŶĚĞƌƐ͕ŐƵĂƌĂŶƚŽƌůŽĂŶƐƐƟůů
ĂĐĐŽƵŶƚĨŽƌũƵƐƚϬ͘ϰйŽĨƚŚĞh<
ƵŶƐĞĐƵƌĞĚĐŽŶƐƵŵĞƌĮŶĂŶĐĞ
market according to a review by
the Financial Conduct Authority
ŝŶϮϬϭϳ͘
tŝƚŚŽƚŚĞƌƉĂƌƚƐŽĨƚŚŝƐŵĂƌŬĞƚ
under regulatory pressure and
ƚƌĂĚŝƟŽŶĂůůĞŶĚĞƌƐƌĞƚƌĞĂƟŶŐ
ĨƌŽŵƚŚĞƐƉĂĐĞ͕ŵŝŐŽĞƐƟŵĂƚĞƐ
ƚŚĞƌĞĂƌĞϳ͘ϴŵͲϵ͘ϴŵƉŽƚĞŶƟĂů
ƵŶƚĂƉƉĞĚĐƵƐƚŽŵĞƌƐŝŶƚŚĞh<͘
POLITICAL RISKS
ĞƐƉŝƚĞƌĂǁĨŽƌĚ͛ƐĂƉƉĂƌĞŶƚ
desire to help people rebuild
 We explain what this company does UNDER THE BONNET

their credit and ergo no longer THE AMIGO CIRCLE OF LENDING

need his company’s services,
it should remembered that
ŵŝŐŽŝƐƐƟůůƚŚĞƚĂƌŐĞƚŽĨĐĞƌƚĂŝŶ
ƉĞŽƉůĞ͛ƐŝƌĞ͘
>ĂďŽƵƌDWĨŽƌtĂůƚŚĂŵƐƚŽǁ͕
Stella Creasy has been a
ůŽŶŐͲƟŵĞĐƌŝƟĐŽĨƉĂLJĚĂLJ
ůŽĂŶĐŽŵƉĂŶŝĞƐ͘^ŚĞĚŽĞƐŶ͛ƚ
ĚŝƐƟŶŐƵŝƐŚďĞƚǁĞĞŶƚŚĞůŝŬĞƐŽĨ
tŽŶŐĂĂŶĚŵŝŐŽ͕ŐŽŝŶŐĂƐĨĂƌ
ƚŽĐĂůůƚŚĞůĂƩĞƌĂ͚ůŽĂŶƐŚĂƌŬ͛͘
/ŶĂƌĞĐĞŶƚĂƌƟĐůĞŝŶThe Sun by
ƌĞĂƐLJ͕ƐŚĞĂƩĂĐŬĞĚƚŚĞƉƌĂĐƟĐĞƐ
ŽĨŚŝŐŚĐŽƐƚůĞŶĚĞƌƐĂŶĚƐĂŝĚ
͚ŵŝŐŽůĞƚƐĨƌŝĞŶĚƐŐƵĂƌĂŶƚĞĞ
loans, so has two people to
ĐŚĂƐĞŝĨƚŚĞĚĞďƚŐŽĞƐďĂĚ͛͘
ƌĂǁĨŽƌĚƐĂLJƐŚĞƚƌŝĞĚƚŽ
engage Creasy in dialogue but
ŐŝǀĞŶƚŚĞĂŵŽƵŶƚŽĨŵŽŶĞLJƚŚĞ ƐůƵŵƉĨŽůůŽǁŝŶŐƚŚĞƌĞůĞĂƐĞŽĨŝƚƐ
A look at the company’s
ĐŽŵƉĂŶLJŚĂƐƐƉĞŶƚŽŶĂĚǀĞƌƟƐŝŶŐ͕ ĮƌƐƚŚĂůĨƌĞƐƵůƚƐ͕ŵŝŐŽŝƐƚƌĂĚŝŶŐ
shareholder register suggests
it may have inadvertently have ŽŶϭϮ͘ϯƟŵĞƐϮϬϭϵ͛ƐϮϬ͘ϵƉŽĨ
ƚŚĂƚŝŶƐƟƚƵƟŽŶŝŶǀĞƐƚŽƌƐďĞůŝĞǀĞ
ŵĂĚĞŝƚƐĞůĨĂƚĂƌŐĞƚ͘ ĞĂƌŶŝŶŐƐƵƐŝŶŐŵĂƌŬĞƚĨŽƌĞĐĂƐƚƐʹ
ƚŚĞĐŽŵƉĂŶLJŝƐĂǁŝŶŶĞƌ͘
One reason that Amigo has ĂŶƵŶĚĞŵĂŶĚŝŶŐƌĂƟŶŐ͘
Names include Investec Asset
ƐƵĐŚĂĚŽŵŝŶĂŶƚƉŽƐŝƟŽŶŝŶ :WDŽƌŐĂŶƐĂLJƐ͚͗dŚĞƉƌŝŵĂƌLJ
DĂŶĂŐĞŵĞŶƚ͕tŽŽĚĨŽƌĚ
the guarantor loan market, ĂŝŵŽĨƚŚŝƐ;ŐƵĂƌĂŶƚŽƌͿƐƚƌƵĐƚƵƌĞ
Investment Management and
ǁŝƚŚĂŶϴϴйƐŚĂƌĞ͕ŝƐŝƚƐďƌĂŶĚ ŝƐƚŽĞŶĐŽƵƌĂŐĞƌĞƉĂLJŵĞŶƚŽĨ
:ĂŶƵƐ,ĞŶĚĞƌƐŽŶ/ŶǀĞƐƚŽƌƐ͘
ĂǁĂƌĞŶĞƐƐ͘ the Amigo loan; this has proven
ŵŝŐŽƉůĂŶƐƚŽƉĂLJŽƵƚϯϱйŽĨ
But being a well known name ĞīĞĐƟǀĞ͕ǁŝƚŚůĞƐƐƚŚĂŶϭϯй
ŝƚƐƉŽƐƚͲƚĂdžƉƌŽĮƚƐĂƐĚŝǀŝĚĞŶĚƐ
clearly has its downsides as ŽĨƉĂLJŵĞŶƚƐŽŶĂǀĞƌĂŐĞŽǀĞƌ
ĂŶĚůŽŽŬŝŶŐĂƚĨŽƌĞĐĂƐƚƐĨƌŽŵ
ƐĞĞŶǁŝƚŚƌĞĂƐLJ͛ƐĂƩĂĐŬŽŶ ƚŚĞƉĂƐƚĮǀĞLJĞĂƌƐĐŽŵŝŶŐĨƌŽŵ
JPMorgan Cavenove, this
ƚŚĞĐŽŵƉĂŶLJ͘ ŐƵĂƌĂŶƚŽƌƐ͛͘
ĞƋƵĂƚĞƐƚŽĂŵĂŝĚĞŶĚŝǀŝĚĞŶĚ
/ŶŽƚŚĞƌǁŽƌĚƐďĞĐĂƵƐĞŽĨƚŚĞ
LJŝĞůĚŽĨϮй͕ƌŝƐŝŶŐƚŽϯ͘ϰйŝŶ
CASH MACHINE ůŝŶŬƚŽĂĐůŽƐĞĨƌŝĞŶĚŽƌĨĂŵŝůLJ
ϮϬϮϬ͘ůƐŽŐŝǀĞŶƚŚĞƐŚĂƌĞƉƌŝĐĞ
ĞƐƉŝƚĞƚŚĞĚŽǁŶƐŝĚĞƐŽĨďĞŝŶŐ member Amigo’s borrowers
ĂǁŚŝƉƉŝŶŐďŽLJĨŽƌůĞŌůĞĂŶŝŶŐ
ŵĞŵďĞƌƐŽĨWĂƌůŝĂŵĞŶƚ͕ƚŚĞƌĞ͛Ɛ “
don’t want to let guarantors
down by not paying back

“
ŶŽĚĞŶLJŝŶŐƚŚĞƐƚƌĞŶŐƚŚŽĨ ƚŚĞĐĂƐŚ͘
ŵŝŐŽ͛ƐďƵƐŝŶĞƐƐŵŽĚĞů͘ ŵŝŐŽŚĂƐƐƉĞŶƚĂůŽƚŽĨ
ZĞůĞĂƐŝŶŐĮƌƐƚƋƵĂƌƚĞƌƌĞƐƵůƚƐ Amigo lets friends ŵŽŶĞLJŽŶĂĚǀĞƌƟƐŝŶŐĂŶĚƚŚŝƐŝƐ
recently, the company increased
ŝƚƐƌĞǀĞŶƵĞďLJϰϳйƚŽάϲϮ͘ϵŵ
guarantee loans, so it has ƉĂƌƚŽĨƚŚĞĐŽŵƉĂŶLJ͛ƐĞīŽƌƚƐƚŽ
create a high barrier to entry to
ŽŶĂLJĞĂƌͲŽŶͲLJĞĂƌďĂƐŝƐ͘/ƚƐƉƌŽĮƚ two people to chase if ŝƚƐŶŝĐŚĞŵĂƌŬĞƚ͘
ĂŌĞƌƚĂdžŽŶůLJŝŶĐƌĞĂƐĞĚďLJϰйƚŽ the debt goes
es bad While some companies have
άϭϮ͘ϯŵ͕ĂŶĚƚŚŝƐĚŝƐĂƉƉŽŝŶƚĞĚ ĂƩĞŵƉƚĞĚƚŽůĂƵŶĐŚŐƵĂƌĂŶƚŽƌ
ŝŶǀĞƐƚŽƌƐĂƐƐŚŽǁŶďLJĂϲйƉƌŝĐĞ loan products, given that Amigo
ĚĞĐůŝŶĞŽŶƚŚĞĚĂLJ͘,ŽǁĞǀĞƌ͕ŝƚ ǁĂƐĮƌƐƚŽƵƚŽĨƚŚĞƐƚĂůůƐŝŶϮϬϬϱ
ŝƐǁŽƌƚŚŶŽƟŶŐƚŚĞƉƌŽĮƚĮŐƵƌĞ ŝƚĐŽƵůĚƚĂŬĞĂůŽŶŐƟŵĞĨŽƌƚŚĞƐĞ
ǁĂƐĐŽŶƐƚƌĂŝŶĞĚďLJ/WKĐŽƐƚƐ͘ ƌŝǀĂůƐƚŽĐĂƚĐŚƵƉ͘;^Ϳ

13 September 2018 | SHARES | 43

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 INDEX
KEY Sirius Minerals (SXX) 8 WorldPay (WPY) 12
Ideagen (IDEA:AIM) 18
• Main Market IMI (IMI) 40 Sopheon (SPE:AIM) 14
• AIM InterContinental 7 Sports Direct (SPD) 10
• Investment Trust Hotels (IHG) St. James’s Place 30
• ETF (STJ)
Janus Henderson 33
• Funds Global Financials Standard Chartered 32
(3191923) (STAN)
JD Sports Fashion 18 Superdry (SDRY) 22
Amigo (AMGO) 42 (JD.)
Team17 (TM17:AIM) 16
Ashmore (ASHM) 24
Unilever (ULVR) 8
Barclays (BARC) 32
Whitbread (WTB) 7
BP (BP.) 30
British Land (BLND)
Carnival (CCL)
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Jupiter International 33 OVER THE NEXT
Financials (B58D9P3)
Land Securities 30 SEVEN DAYS
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Lloyds (LLOY) 32 14 Sep: JD Wetherspoon. 17 Sep: Finsbury Food,
Lxyor MSCI World 34 MJ Gleeson. 20 Sep: Kier, Inland Homes.
Financials ETF (FINW)
Melrose Industries 16 Half Year Results
CFP SDL UK 2 (MRO) 18 Sep: Keywords Studios, Spire Healthcare.
Buffettology Fund
(BF0LDZ3) Mid-Wynd 2 19 Sep: Kingfisher, Alliance Pharma.
International 20 Sep: French Connection.
City of London 29 Investment Trust
Investment Trust (CTY) (MWY) Trading Statements
Debenhams (DEB) 10 Miton UK MicroCap 39 4 Sep: Investec. 17 Sep: Dairy Crest. 18 Sep: Ocado.
Diageo (DGE) 30 Trust (MINI) 19 Sep: Babcock. 20 Sep: IG.
Domino’s Pizza (DOM) 2 Polar Capital Global 33
Financials (PCFT)
EasyJet (EZJ) 24
Polar Capital Global 33
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13 September 2018 | SHARES | 45