December 2011

Myddleton Croft Investment Managers Balanced Moderate Risk Model
Myddleton Croft Investment Managers

KEY FACTS
Portfolio Risk Spectrum
MANAGERS COMMENTARY
Review of 2011
December 2011
Defensive Cautious Moderate Adventurous Highly Adventurous Speculative

Investment Managers Patrick Toes
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Our portfolios performed satisfactorily in 2011 as a whole, however I am minded not to say well, since we failed to beat our benchmark. I would say that whilst it is important to view the end result, we consider that it is equally important to look at how you have run the race. Viewing our performance in this context, firstly, six out of seven of our models including Enhanced Income Portfolio produced a positive performance for 2011. Secondly, during the most stressful part of the race, when markets sold off most in 3rd quarter, our portfolios held up and protected your clients capital, something which we have demonstrated numerous occasions over the last few years. This is well illustrated by the chart which measures the maximum drawdown of MCIM Balanced Moderate & Enhanced Income Portfolio against three benchmarks (see below). Thirdly, we often referenced APCIMS Balanced as measure of how our competitors perform and that our Balanced Moderate Models performance exceeded that APCIMS benchmark by 0.4% in 2011. However just as our performance was negatively affected by lack of gilt exposure, we understand many if not most of our competitors, who took a similar view to Myddleton Croft, namely that gilts offered no value and that corporate bonds were more attractively valued, and were largely exposed to the latter. By implication such positioning would imply a 3% underperformance of the APCIMS Balanced benchmark and that APCIMS benchmark may prove an over optimistic measure of our competitors in 2011, in the absence of offsetting outperformance elsewhere in those portfolios. Our performance which beat that APCIMS benchmark by 0.4% on the year, may have exceeded our peers by over 3%. Upon further investigation of open ended funds managed by discretionary managers, there were a number down over 10% and one down as much as 18%, so perhaps I am being too charitable in my estimate of a 3% fall. Lastly, we do see some risk over the medium term that gilts could correct significantly and continue to be very underweighted. Excluding the effect of the gilts, the performance from the remaining 80% of the MCIM Balanced Moderate model did add 1.6% relative to our benchmark. This was the first year for our new service Enhanced Income Portfolio, the most defensive portfolio we offer, which produced a positive return of just under 1% for the year. This portfolio has not been immune from the turbulence in the bond market into which close to two thirds of the portfolio invests. On the positive side it met its income requirement of 4% per annum and similar to our more equity based portfolios, protected capital (see chart below). The volatile and risk-off nature of the markets meant however that the portfolio failed to meet our target return of 6% p.a. This is however a medium term target rather than a yearly one.
Investment Director with over 20 years experience in fund management. Previously a member of Rensburg Sheppards Asset Allocation and Fund Selection Committees for over 9 years and former chairman of those committees at BWD Rensburg, he holds a MSC in Investment Analysis and is an Associate Member of the Society of Investment Professionals (ASIP).
David Cowell
Chief Executive, possessing over 40 years of experience in financial services, with over 25 years being investment management focussed. David formulates the macro economic position and leads the investment process across the portfolio range. He also has over 10 years experience of business consultancy to small and medium sized enterprises.
Stephen Wood
Investment Manager graduated from the University of Manchester in economics. His industry experience ranges from petro-chemical finance to pharmaceutical development within large multinationals. He holds several financial qualifications including CIMA and the IMC and is currently working towards further professional qualifications. He joined Myddleton Croft in 2010.
For Further Information Call :
0113 274 7700

Email : info@mcim.co.uk
Or visit us at : www.myddletoncroft.co.uk
IMPORTANT INFORMATION This communication is for professional investors only and should not be relied upon by private investors. This document is provided to illustrate Myddleton Croft Investment Managers model portfolios and is for information purposes only and does not constitute an advertisement, financial promotion or financial, professional or investment advice. Nothing in this document constitutes a recommendation suitable or appropriate to a recipient's individual circumstances. It should not be inferred that all portfolios will perform exactly the same as the model portfolios as other factors, such as capital gains tax & the time taken to invest the portfolio, may affect individual portfolio performance. Please remember that past performance is not a guide to future performance and that the value of investments may go down as well as up and any opinions expressed are subject to change and may not be current views.
As a bit of a postscript, given recent questions from investors, despite the sell-off in Gold in December we continue to be positive on Gold. The current correction does not change the underlying structural bull case and we consider the key drivers of negative real interest rates, money printing and currency debasement will continue to characterise the global economy and in particular the West for years to come. For our other views on 2012 please read our blog.
Myddleton Croft Investment Managers, 1 Woodside Mews, Clayton Wood Close, Leeds, LS16 6QE T: 0113 274 7700 F: 0113 274 7711 E-mail: info@mcim.co.uk Website: www.myddletoncroft.co.uk Myddleton Croft Ltd is authorised and regulated by the Financial Services Authority. Registered in England & Wales number 05782909. VAT number UK 889 241088. Registered office: 11 Clifford Avenue, Ilkley, LS29 0AS.

Balanced Defensive Risk Model
KEY FACTS
December 2011
PORTFOLIO OBJECTIVE
To generate a portfolio with a balance of income and capital growth over the medium to long term by harnessing the higher return potential of equity markets. The model will seek to reduce the fluctuations in capital values inherent in equity investments through a significant allocation to fixed interest, commodities, absolute return/hedge funds and other non-equity vehicles. Over the medium term, a base case would be 40:60 allocation to equity and non-equity investments respectively. However this allocation is flexible and could vary between 30% and 50% in equities, dependent on valuation and risk. Portfolios are also available with an income or growth mandate.

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Investment Profile
Balanced
PORTFOLIO KEY ATTRIBUTES

Performance Since Launch (Jan 2008)
David Cowell
3 Year Rolling Volatility
Stephen Wood
0113 274 7700

Asset Allocation
Performance Statistics

Balanced Cautious Risk Model
KEY FACTS
December 2011
PORTFOLIO OBJECTIVE

1 2 3 4 5 9
Investment Profile
Balanced

David Cowell
Stephen Wood
0113 274 7700

Asset Allocation

Balanced Moderate Risk Model
KEY FACTS
December 2011
PORTFOLIO OBJECTIVE
To generate a portfolio with a balance of income and capital growth over the medium to long term by harnessing the higher return potential of equity markets. The model will seek to reduce the fluctuations in capital values inherent in equity investments through a significant allocation to fixed interest, commodities, absolute return/hedge funds and other non-equity vehicles. Over the medium term, a base case would be 50:50 allocation to equity and non-equity investments respectively. However this allocation is flexible and could vary between 40% and 60% for each asset class, dependent on valuation and risk. Portfolios are also available with an income or growth mandate.

1 2 3 4 5 9
Investment Profile
Balanced

David Cowell
Stephen Wood
0113 274 7700

Asset Allocation

Balanced Adventurous Risk Model
KEY FACTS
December 2011
PORTFOLIO OBJECTIVE

1 2 3 4 5 9
Investment Profile
Balanced

David Cowell
Stephen Wood
0113 274 7700

Asset Allocation

Balanced Highly Adventurous Risk Model
KEY FACTS
December2011
PORTFOLIO OBJECTIVE

1 2 3 4 5 9
Investment Profile
Balanced

David Cowell
Stephen Wood
0113 274 7700

Asset Allocation

Balanced Speculative Risk Model
KEY FACTS
December2011
PORTFOLIO OBJECTIVE

1 2 3 4 5 9
Investment Profile
Balanced

David Cowell
Stephen Wood
0113 274 7700

Asset Allocation

Enhanced Income Portfolio
KEY FACTS
Q4 2011
PORTFOLIO OBJECTIVE
The objective of the Enhanced Income Portfolio is to target a 6% return of which 4% can be distributed either half yearly, yearly or rolled up. The secondary aim is to provide a degree of protection against the effects of inflation. The portfolio is predominantly invested in bonds, which will comprise 70% of the allocation on average with the balance invested in equities, absolute return and commodities. The Enhanced Income Portfolio was launched at the beginning of 2011. It should be noted that the performance and volatility data before that date (presented below) is from the back-tested portfolio and is provided for illustration purposes only.
Investment Profile
EIP

Back Tested Performance Since Jan 2008
David Cowell
Stephen Wood
Back Tested 3 Year Rolling Volatility
0113 274 7700

Asset Allocation

December 2011

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Myddleton Croft Investment Managers Balanced Moderate Risk Model

Myddleton Croft Investment Managers

Defensive Cautious Moderate Adventurous Highly Adventurous Speculative

For Further Information Call :

0113 274 7700

Myddleton Croft Investment Managers Balanced Moderate Risk Model

Defensive Cautious Moderate Adventurous Highly Adventurous Speculative

PORTFOLIO KEY ATTRIBUTES

3 Year Rolling Volatility

For Further Information Call :

0113 274 7700

Myddleton Croft Investment Managers Balanced Moderate Risk Model

Defensive Cautious Moderate Adventurous Highly Adventurous Speculative

PORTFOLIO KEY ATTRIBUTES

3 Year Rolling Volatility

For Further Information Call :

0113 274 7700

Myddleton Croft Investment Managers Balanced Moderate Risk Model

Defensive Cautious Moderate Adventurous Highly Adventurous Speculative

PORTFOLIO KEY ATTRIBUTES

3 Year Rolling Volatility

For Further Information Call :

0113 274 7700

Myddleton Croft Investment Managers Balanced Moderate Risk Model

Defensive Cautious Moderate Adventurous Highly Adventurous Speculative

PORTFOLIO KEY ATTRIBUTES

3 Year Rolling Volatility

For Further Information Call :

0113 274 7700

Myddleton Croft Investment Managers Balanced Moderate Risk Model

Defensive Cautious Moderate Adventurous Highly Adventurous Speculative

PORTFOLIO KEY ATTRIBUTES

3 Year Rolling Volatility

For Further Information Call :

0113 274 7700

Myddleton Croft Investment Managers Balanced Moderate Risk Model

Defensive Cautious Moderate Adventurous Highly Adventurous Speculative

PORTFOLIO KEY ATTRIBUTES

3 Year Rolling Volatility

For Further Information Call :

0113 274 7700

Myddleton Croft Investment Managers Balanced Moderate Risk Model

PORTFOLIO KEY ATTRIBUTES

Back Tested 3 Year Rolling Volatility

For Further Information Call :

0113 274 7700

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