Pre-Christmas Financial Planning The official countdown to Christmas starts right after Rememberance Sunday!
- page 21
PSR Kick-Starts Industry-Wide Effort to Tackle Payment Scams -page 7
Could Santa Have a Present or a Lump of Coal for the Markets Year? -page 22
FCA Publishes Interim Feedback on Crowdfunding Rules
Their earlier call for input raised a number of issues for discussion.
Pages 23
1 investorReview November 2016
investorReview November 2016
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Editor's Letter Welcome to the end-of-year edition of Investor Review, which offers a variety of must-read sections, including long-term investments, alternative investments and asset management to name a few. In recent news, seven in ten (70%) property investors believe that regulators are unprepared for blockchain’s introduction, according to a new study by the real estate investment platform, BrickVest. In this edition, we discover that Global Advisors Investment Fund plc (GABI) has been admitted to the Official List of the Channel Islands Securities Exchange (CISE) to become the first regulated bitcoin fund to be listed on any exchange globally. In other noteworthy news, we learn that a new centre to help businesses to make better green investment decisions was launched on 14th November. The new Centre for Climate Finance and Investment at the UK’s Imperial College Business School will work with companies to manage the risks and financial opportunities posed by climate change. I hope you enjoy reading this December edition, which showcases a wide range of global news and thought-provoking commentary from the global institutional investment industry.
Jonathan Miles, Editor Jonathan.Miles@ai-globalmedia.com
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Contents News pages 5-10. Asset Management Turnover down on European Market for Structured Securities page 11. What Could Brexit Mean for Your Mortgage? page 12. Alternative Investment AIMA Publishes Guide to Managed Accounts page 13. World-First Listing on CISE for Global Bitcoin Fund page 14. Personnel Accountants’ Pay Bolstered By 53% Rise in Bonuses page 15. Individual Savings Account Put Some Wind Power in Your ISA for 8% Returns page 16. Total Funds in UK ISAs Are Likely to Almost Double in Between 2005 and 2009 page 17. Pensions Pension Providers Making Good Progress on Reducing Fees and Charges page 19. Uncertain Investment Markets – What Does This Mean for My Pension? page 18. Financial Planning Pre-Christmas Financial Planning page 20. How Do Other Countries’ Business Advisers View Brexit? page 21. Long-term Investments New Centre Aims to Help Financial Investors Manage Climate Risks page 22. Could Santa Have a Present or A Lump of Coal for the Markets Year? page 23. "FCA Publishes Interim Feedback on Crowdfunding Rules page 24.
Winners List 2016 Finacial Advisor of the Year MitchellProckter Financial Services Limited page 25.
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investorReview News
Hedge Fund Association Supports Expanded Accredited Investor Definition The Hedge Fund Association reported that on December 5, 2016 the U.S. House of Representatives passed H.R. 6427, the Creating Financial Prosperity for Businesses and Investors Act, which along with other financial service reforms, provides for the addition of a knowledge and education-based category of accredited investors.
H.R. 6427 amends Section 2(a) (15) of the Securities Act of 1933, expanding the definition of ‘accredited investor’ that determines which investors may participate in private securities offerings not registered with the U.S. Securities and Exchange Commission (SEC). This definitional change was originally included in H.R. 2187, which passed on February 1, 2016. The HFA, an international not-for-profit organisation representing the interests of investors, hedge funds and service providers, believes that the bill provides a much-needed practical update to the current definition, while promoting capital formation. “The Hedge Fund Association applauds the bipartisan passage of H.R. 6427. HFA will continue to support reasonable changes by Congress and the SEC to the accredited investor definition, and the private offering exemptions in general, provided such changes enhance investor protection while simultaneously enabling greater access by knowledgeable professionals to alternative investment funds,” said Mitch Ackles, HFA President.
knowledge related to an investment and whose education and job experience is verified by FINRA or another SRO. “HFA supports verifiable knowledge-based standards to expand the universe of accredited investors and encourages the Senate to take up and approve the House bill soon as practical” commented Simon Riveles of HFA’s Regulatory Affairs Committee and Partner at Riveles Wahab LLP. Updating the accredited investor definition has been an important goal for both Congress and the SEC since
H.R. 6427’s revisions incorporate the income and net worth requirements for natural persons found in the SEC’s Rule 501(a) of Regulation D, and add language requiring the SEC to adjust these dollar thresholds for inflation every five years, based on the Consumer Price Index. Significantly, the House bill also expands the list of accredited investors to include the following individuals, regardless of whether they meet the income or net worth requirements: (a) brokers or investment advisers licensed or registered with the SEC, FINRA or other self-regulatory organisation (SRO) (e.g., NFA), or any state regulatory authority; and (b) any other natural person the SEC determines by rule to have professional 55investorReview investorReviewNovember October 2016 2016
the passage of The Dodd-Frank Act Wall Street Reform and Consumer Protection Act. An official report released by the SEC staff in December 2015 included 11 possible revisions to Rule 501(a). The HFA previously encouraged the SEC to make sensible changes to the accredited investor definition and avoid revisions that are disruptive to the capital markets. To learn more about the Hedge Fund Association, please visit: www.HedgeFundAssoc.org.
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Miton on 2017 - the Retreat from Globalisation 4 experts from the Miton Group give their opinions on investment markets in the UK, US, Europe and multi-asset and look ahead to what the future could hold in 2017 for these. Gervais Williams, fund manager, CF Miton UK Smaller Companies Fund said that in terms of the UK, “during 2016, the fluctuations of the equity market were principally driven by the expected impact of Brexit and the election of Donald Trump as US President.
companies deriving most of their business at home could rise by 10%-20% as the new President cuts Corporation Tax. We don’t believe this outcome is currently priced into valuations. Second, we expect the improving economic outlook will encourage US CEOs to boost capital expenditures - an outcome which should create a virtuous cycle.
“In 2017 investors will have to address the reality of these challenges. We believe the greatest challenge will be correctly identifying the stocks that remain well-positioned to generate ongoing dividend growth in spite of the changing political and economic agenda. These factors are all the more relevant at a time when world growth remains subdued, and profit margin pressure is becoming more evident in a range of industrial sectors. Many plc’s are already paying out most or all of their internal cashflow, so any trading disappointment as economic changes come through will likely be reflected in further dividend cuts.
“These catalysts have major implications for portfolio construction. The biggest beneficiaries of Trump’s proposals should be domestic small and mid-cap companies, as they are higher tax payers and stand to benefit most from an acceleration in GDP growth.” Carlos Moreno, fund manager, CF Miton European Opportunities Fund turns the spotlight on to Europe, commenting that, “the European economy is likely to remain sluggish, with little inflation. As in the US the working age population is falling and productivity growth is on a long term down trend. Credit demand is weak and investment levels are low. On top of this there is the political risk of a populist government in a major European Union country seeking to exit the Euro. Many economists are sceptical of the long-term sustainability of the Euro system as it currently stands.
“With market valuations so high, and bond yields now rising, the performance penalty for holding the wrong stocks could become much more significant. Active fund managers not only need to continue to find winning stocks, but also need to be sure footed in steering their clients’ portfolios around the setbacks amongst those that get caught out.” On the US - Nick Ford, fund manager, CF Miton US Opportunities Fund said, “the stars are aligned for a strong upward move in US stocks in 2017. Since Trump’s surprise victory the S&P 500 has risen 6%, but the move has been driven by stocks in the lower echelons of the index - including previously out of favour sectors such as transportation, materials, banks and machinery. Blue chip growth stocks, formerly prized for their safety and stability, have lagged. This sector rotation is a very bullish development because it shows investors have started to position their portfolios for a pick-up in economic growth. “There should be two major catalysts for US equities next year. First, a complete revaluation of stocks based on US corporations paying a far lower tax rate. Earnings per share for
“It’s not easy to be positive on the European economy, but there is no shortage of strong company growth stories. As stock pickers (not economists) we aim to run an economy balanced fund. We look for quality businesses whose best days are ahead of them. They are characterised by pricing power, high returns on capital, big competition ‘moats’ and substantial potential to grow volumes and expand margins. “We like companies that are expanding globally from a European base, yet which trade at a substantial discount to their intrinsic value. Many of these names are medium sized and we will continue to have a substantial mid cap bias. Europe has many of these great businesses in areas such as branding and hi tech engineering. Family shareholdings are common, which we like very much in contrast to Anglo Saxon short tenure, heavily short term share optioned, CEOs. Ferrari the sports car manufacturer, is
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a perfect example of these attributes and is a top 3 play for us.” Finally, David Jane, fund manager, MI Cautious Monthly Income Fund provides her insight into multi-asset investment. “Broadly we think the world economy will be stronger in 2017. At the same time, it’s reasonable to expect bond yields and inflation to be on a rising trend. In this context, we expect to be positive on equities, with profits rising as revenues start to accelerate. “We’d favour developed markets, cyclical industries and inflation beneficiaries versus the ‘defensive’ and ‘bond proxy’ areas. Regional differences may not be as important as they have been in recent years, although if the US dollar remains strong then Europe and Japan may continue to benefit from a weaker currency. We expect sector differences to dominate, with financials outperforming on the back of rising bond yields and less regulatory pressure. We expect industrials and materials to remain strong on the back of a favourable environment for corporate capital expenditures and government infrastructure spending. “2017 may be a year when all the risk is to the downside in bonds. With rising shortterm interest rates and increasing inflation, the outlook for longer-dated government and corporate bonds could be very negative. At the same time the prospects for highly leveraged companies could worsen as refinancing costs increase. We would favour short-dated corporate bonds as there is lower risk of loss than in longer maturities. Simply earning the yield to maturity could be the best that can be achieved as rising interest rates lead to capital losses and credit spreads have little room to narrow further.”
www.mitongroup.com.
investorReview News
PSR Kick-Starts Industry-Wide Effort to Tackle Payment Scams The Payment Systems Regulator (PSR), the economic regulator for the £75 trillion UK payment systems industry, has recently announced the start of a concerted and coordinated industry-wide effort to tackle payment scams.
On 16th December, the regulator published its response to a super-complaint issued by consumer watchdog Which?, about protection for people making authorised ‘push’ payments. In the response the PSR outlines an approach that will see regulators and industry commit to working together to better protect people from scams.
The PSR has put together a package of work aimed at reducing fraudsters’ ability to perpetrate scams and, when they do occur, increasing the chance that the victim will be able to recover the funds. The PSR has agreed a programme of work with Financial Fraud Action UK that the banking industry should lead on: •
In the super-complaint, lodged in September 2016, Which? raised concerns that there is not enough protection for people who are tricked into transferring money to a fraudster via an authorised push payment (APP) – when the consumer instructs their bank to send money. • The PSR has now examined Which?’s evidence and gathered its own to build a clearer understanding of the issue. As a result, the regulator is warning that APP scams are a growing concern, and more needs to be done to address the problem. Among its findings the PSR has identified that, in contrast to other types of fraud and scams, the data available on the scale and type of APP scams is poor-quality, and the ways in which banks currently work together in responding to reports of scams needs to improve. The PSR also found evidence to suggest some banks could do more to identify potentially fraudulent incoming payments, and to prevent accounts falling under the influence of scammers. Hannah Nixon, Managing Director of the Payment Systems Regulator said, “‘In a short space of time we have built a clearer picture of the problems we are facing, and it is evident that this type of scam is a growing problem that needs to be tackled. Tens of thousands of people have, combined, lost hundreds of millions of pounds to these scams, but the data we have seen so far is incomplete. We need a concerted and coordinated industry-wide approach to better protect consumers, and we need it to start today.”
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Industry, liaising with the Information Commissioner’s Office as appropriate, to develop a common understanding of what information can be shared under existing law and the key legal barriers to sharing further relevant information (for example, information that would help victims recover their money). Industry to develop, collect and publish robust scam statistics, to address the lack of clear data on the scale and scope of the problem, and to enable monitoring of the issue over time. Industry to develop a common approach or best practice standards, that both the victim’s bank and the bank which receives the money should follow when responding to reports of scams. The Payment Systems Regulator would expect this to cover issues such as the availability of fraud specialists and processes for agreeing indemnity agreements between banks. The PSR will monitor this work on an ongoing basis, and commit to reviewing industry progress in the second half of 2017.
In addition, the PSR will do further work to consider the potential for the operators of the payment systems, in particular Faster Payments Service and CHAPS, to play an expanded role in helping to minimise the consumer harm caused by scams. It will look to publish specific terms of reference for this work in early 2017 and its findings in the second half of 2017. The FCA will also undertake actions, which can be viewed on the FCA website or in the footnotes below. The PSR concluded in its response that there was not sufficient evidence to justify
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a change in liability (i.e. making banks liable for reimbursing victims of APP scams), and it is aware of the possible unintended consequences of doing so. However, the regulator did note that, as work progresses and additional evidence comes to light, it will consider whether it is appropriate to propose changes to the obligations or incentives that banks have for these types of scams. Hannah Nixon continued,” there is no silver bullet, but more can be done to prevent these scams in the first instance, and to respond faster when it does happen, in order to give consumers more support and help in recovering their money. Across the banking industry there is already a range of work underway that has the potential to help combat some of the issues we are seeing, but more needs to be done. “As technology improves, we need to find ways of making it harder for fraudsters to commit these scams. We are committed to seeing the banking industry work together to take a firm and pro-active stance in protecting their customers from this type of fraud.”
The full response to the Which? super-complaint and the proposed next steps outlined by the PSR can be found here: www.psr.org.uk/psr-publications/news-announcements/ which-super-complaint-our-response-Dec-2016?utm_ source=psr-press&utm_campaign=which-sc&utm_medium=email. www.psr.org.uk www.fca.org.uk
investorReview News
The Fed's 'Significant' Rate Rise – but Investors Don't Need to Accept Lower Returns Investors do not need to accept lower returns because of the Federal Reserve’s rate raise, affirms the CEO of one of the world’s largest independent financial advisory organisations.
Nigel Green, founder and chief executive of deVere Group, is speaking out after the Fed announced a 25bp rate hike at the FOMC meeting on 14th December. This takes the key Fed funds rate up to a range of 50bp-75bps. Mr Green comments that he recent “rate rise is only the first increase this year and just the second since June 2006. It is significant because it gives further weight to the considered argument that the era of very low inflation and interest rates may be ending. And not just in America - the world’s largest economy - but globally too, as the policies pursued by central banks since the financial crash of 2008 come under increasing attack.
European exporters will benefit from the strong dollar, though investors may want to hedge their euro and yen currency exposure. “It can be expected that they will also seek to avoid emerging markets. Higher U.S. dollar borrowing rates threaten the viability of almost USD 9trillion of emerging market corporate debt. This is because a stronger dollar makes interest and capital repayment more expensive in local currency and because when debt needs
“And despite the Fed appearing to want to proceed cautiously, and not threaten a constant rise in rates during 2017, many investors believe there are more hikes to come due to the strength of the U.S. economy and the likely policies of a Trump presidency.” He continues: “Whilst there might be some degree of nervousness about the Fed’s move, and the likely dawning of a new era, investors do not need to accept lower returns. There will be winners and losers, and those investors who have a good fund manager, who selects the right investments at the right time, will surely profit. “Ensuring proper portfolio diversification will also be essential to taking advantage of the rewarding opportunities and sidestepping the potential risks.” He goes on to say: “Savvy investors are likely to favour the dollar over other currencies, since higher Fed rates will attract overseas capital into the U.S. and favour those sectors that will most likely benefit from the Trump stimulus and de-regulation that he has promised. “These include U.S. financials – which are also benefiting from the steepening U.S. yield curve - energy and pharma stocks. Japanese and 8 investorReview November 2016
to be rolled over, the interest demanded may be much higher.” Mr Green concludes: “No matter what the Fed does with interest rates moving forward, investors who are well prepared and properly advised can look to build wealth as we move beyond the era of very low rates and inflation.”
www.devere-group.com
investorReview News
Climate-Related Financial Disclosures Impax Asset Management, the specialist investment manager focused on environmental markets and related resource efficiency sectors, on 14th December welcomed the recommendations outlined in the Financial Stability Board’s Task Force on climate-related Financial Disclosures on best practice for company reporting on climate-related Financial Disclosures.
Welcoming the recommendations from the Bank of England’s Task Force on Climate-related Financial Disclosures, Chief Executive of Impax Asset Management said, “we welcome the Task Force’s ambition to bring consistency and transparency to companies’ environmental reporting and hope that these recommendations will be widely adopted. This report is a call to action to companies to provide investors with the information they need to make informed decisions on climate risk. Pension fund trustees now have a clear framework for assessing climate risk and ensuring that their fiduciary duties in this area can be fulfilled.”
Ian Simm added, “we have been running three model portfolios based on the MSCI World Index, which reduce fossil fuel exposure to varying degrees, and in order to preserve energy price (factor) exposure, replace it with Energy Efficiency stocks. The models have been rebalanced four times over the past year in response to MSCI index weightings and updates to our proprietary fossil fuel risk analysis. Our model currently indicates a larger shift into Energy Efficiency from fossil fuel (exploration and production companies) than one year ago.” www.impaxam.com
“Impax has published several papers on climate risk in investment portfolios over recent years which have built on the concept that climate change is a measurable investment risk, not an uncertainty. Our climate risk model is, we believe, one of the first to use scenarios for the potential impairment of company cash flows, an approach recommended by the Task Force.” •
The risk for investors today is principally around government intervention to limit emissions, not a changing climate;
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Carbon foot-printing is an inappropriate way to measure this risk (and using it may actually increase the risk in a portfolio);
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Companies owning fossil fuel assets are most at risk;
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By using scenarios of government intervention, Impax estimates the financial impact of climate risk on the future cash flows of individual companies;
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There is evidence that this financial impact isn’t reflected in the 14th December valuations, i.e. many fossil fuel stocks may be overvalued. There is a strong parallel here in listed US coal stocks, whose aggregate value has dropped by more than 90% since 2011.
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investorReview News
Investors Flag Lack of Regulatory Readiness as Key Blockchain Obstacle Seven in ten (70%) property investors believe that regulators are unprepared for blockchain’s introduction, according to a new study (1) by the real estate investment platform, BrickVest.
Integrating blockchain with existing regulatory and legal frameworks was identified by property investors as the biggest challenge preventing its widespread adoption by the real estate sector. The second largest perceived obstacle is the reluctance by banks, insurance companies and private equity firms to invest in blockchain technology followed by a lack of knowledge and education among industry participants. Less than half (44%) of property investors claimed to be ‘familiar’ with blockchain of which just 2% are ‘very familiar’. Despite the challenges, more than half (56%) of real estate investors believe that the sector will eventually adopt blockchain technology for transactions. BrickVest believes that blockchain technology can improve the inefficient structures of financial markets. The company is currently prototyping blockchain as a repository system and has filed a provisional patent. This will enhance BrickVest’s systems and controls above the market’s antiquated legacy systems in an increasingly rigorous regulatory environment.
“The main advantage of blockchain is that transactions have the potential to be significantly cheaper, faster and more transparent. Decentralised ledgers are able to keep secure transaction records between two parties, completely independent of any authorities, making tampering with this record difficult. There is no one entity which controls blockchain meaning that participants can verify the transactions and they are not forced to rely on one entity to keep track of balances.” In considering the obstacles that blockchain needs to overcome, over a quarter (28%) of investors highlighted the interoperability issues between private networks such as banks and other financial institutions, and that someone will have to manage all of the protocols. A fifth (19%) thought the scalability of the technology would present a challenge while 18% flagged the operational risks associated with blockchain. Emmanuel Luminau added, “we believe that that middle man is becoming redundant and P2P systems that benefit investors are the way forward. It is for this reason that we are filing for a patent. Blockchain technology makes particular
Blockchain technology diminishes the privileged position of the financial ‘gatekeepers’ and ensures greater transparency, efficiency and higher returns in the financial and real estate investments alike. A third (31%) of investors felt that blockchain’s adoption would be opposed by financial gatekeepers such as notaries and trustees whose existence is threatened by the new technology. Emmanuel Lumineau, CEO at BrickVest commented, “while the majority of property investors view blockchain as a core part of the future industry landscape, investors have correctly highlighted many of the challenges ahead, most notably at a legal and regulatory level. It will be a far from straightforward journey to overcome the status quo. 10 investorReview November 2016
sense for secondary markets such as real estate investments and equity crowdfunding, which previously wouldn’t have been viable due to high transaction costs.” BrickVest’s platform allows investors to invest in pre-vetted commercial real estate with the ease of an online trading platform. Investors can now access real estate that previously was only accessible to large institutions such as pension funds, insurance companies and large family offices. The firm offers a range of investment opportunities allowing investors to select an opportunity based on the preferred asset class, geography and return profile. BrickVest has unlocked the ability to combine unparalleled ease of access and transparency while providing an institutional-level investment platform with liquidity, supported by reputable fund service providers. European investors interested in signing up and viewing BrickVest’s pan-European real estate investment offering can do so on brickvest.com/en. (1) Research carried out online with 101 property investors in November 2016.
investorReview E-Commerce Asset Management
Turnover down on European Market for Structured Securities
Excellence in Equity
Exchange turnover in investment products and leverage products fell 9% to €25.4 billion on Europe’s financial markets in the third quarter of 2016. This represented a 26.0% decrease year on year. That is one of the outcomes of an analysis by Derivative Partners AG of the latest market data collected by the European Structured Investment Products Association (EUSIPA) from its members. he members of EUSIPA include: Zertifikate Forum Austria (ZFA), Belgian Structured Investment Products Association (BELSIPA), Association Française des Produits Dérivés de Bourse (afpdb), Deutscher Derivate Verband (DDV), Associazione Italiana Certificati e Prodotti di Investimento (ACEPI), Swedish Exchange Traded Investment Products Association (SETIPA), Swiss Structured Products Association (SSPA) and the Netherlands Structured Investment Products Association (NEDSIPA).
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The third quarter turnover in investment products trading on European exchanges amounted to €9.2 billion. This represented a 36.2% share of total transaction volume. Exchange turnover was on a par with the previous quarter’s level and up 3.0% on the figure recorded a year earlier. Turnover in the leverage products segment (Warrants, KnockOut Warrants, Factor Certificates etc.) came to €16.2 billion in the period from July to September. They therefore accounted for 63.8% of the total turnover. The volume was 13.0% lower than in the second quarter of 2016. This represented a yearon-year loss of 37.0%. At the end of September, trading venues located in EUSIPA member countries were offering 549,495 investment products and 827,523 leverage products. The number of products listed rose by 3.0% in comparison with the previous quarter. The figure was down by 2.0% on the same period of 2015.
year. Compared with the period from April to June, new issuance saw a 5.0% upsurge. However, volume decreased by 10.0% on a year-on-year basis. In total 191,778 new investment products were launched, accounting for 22.8% of all new issues. 647,966 new leverage products were listed, accounting for 77.25 of the aggregate new issues volume.
EUSIPA represents the interests of the European structured investment products business. Derivative instruments such as structured investment products and warrants are the focal point of its activities. EUSIPA works to create an attractive and fair regulatory framework for these financial products.
At the end of the third quarter, the market volume of investment and leverage products in Austria, Belgium, Germany and Switzerland came in at €255.8 billion – up 6% on the figure recorded in the previous quarter. The volume rose by 16.0% when compared with the third quarter of 2015.
The umbrella association acts as a contact for politicians and the European Securities & Markets Authority (ESMA) in all questions concerning structured products. Whenever the need arises, the association is at hand to provide expert advice and opinions, thus playing an active role in the opinion process on the political level.
At the end of September, the market volume of investment products totalled €216.0 billion and was on about the same level as in the second quarter. On a year-on-year basis, turnover was up 2.0%. The outstanding volume of leverage products climbed to approximately €39.8 billion in the third quarter of the year. This represented growth of 66.0%on the second quarter of 2016. In comparison with the same period of the preceding year, outstanding volume registered plus 336.0%. This increase is mainly attributable to developments in Switzerland.
Banks issued a total of 839,744 new investment and leverage products in the third quarter of the
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Greater protection for investors and more comprehensible and transparent products are important concerns for the association. Together with its members, it is actively engaged in promoting Europe-wide standards throughout the sector. These include clear product classification, standardised technical terms and a broad commitment among the member associations to abide by a code of practice for the sector.
www.eusipa.org.
investorReview E-Commerce Asset Management
What Could Brexit Mean for Your Mortgage? Contractor Financials, a company dedicated to making financial services easy for contractors, has run an information-gathering campaign designed to highlight the effects on the mortgage market after Brexit. ith house prices up 5.2% from 2015, this article explores a range of different angles and scenarios to provide insight for those feeling concerned following the Brexit decision. This insight is provided through quotes and predictions from industry professionals and influencers who work in the financial world day after day, within banks, mortgage lenders, or financial advisors.
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Key facts: • *57% of the lenders and financial experts are expecting a 1-5% growth over the next 12 months despite Brexit ‘fears'. •
60% of lenders questioned viewed now
was the best time to take out a fixed rate mortgage. •
The cost of borrowing has fallen since the vote, with the average mortgage now repaid at a rate of 2.85%- down from 2.99%.
With first-hand data collected from the field, this information provides a unique overview of the property market, focusing on property investment and mortgages. Whether you're a first-time buyer considering your options, a property developer looking for an opportunity, or a concerned landlord, this article has the valuable information you need to calm your nerves and help you make informed decisions
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moving forward. For more information on the findings, check out the full article at: goo.gl/3E45Z4. About the company - Contractor Financials was founded in 2001 after identifying a gap in the market for financial help aimed at freelancers and contractors. Since then, they have helped over 22,000 contractors achieve their financial goals, offering a one-stop-shop for financial services including pensions, mortgages, financial protection and investment advice. *The survey was conducted October 2016 - there were 23 respondents.
investorReview E-Commerce Alternative Investment Ones to Watch in European Investment
AIMA Publishes Guide to Managed Accounts
The Alternative Investment Management Association (AIMA), the global representative of alternative investment managers, has published a guide for fund managers wishing to establish a managed account, a popular form of investing in hedge funds that gives greater control over the management of the account to the investor. IMA’s Managed Account Guide aims to provide fund managers with a better understanding of what to expect when offering managed accounts and what some of the operational and regulatory challenges are.
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Its publication comes amid continued investor demand for managed accounts, which offer greater transparency and give investors a bigger say over everything from the investment strategy to the fund’s choice of service providers. Managed accounts can also insulate investors from liquidity fluctuations that can arise in traditional commingled funds when new investors subscribe to the fund or existing investors leave.
We are happy to lend our support in sharing our expertise with the industry.” Managed accounts and other forms of customised and segregated product offerings are increasingly popular. According to a survey last year by AIMA, KPMG and the Managed Funds Association, around half of all hedge fund managers are offering either “funds of one” or managed accounts, and a further 21% plan to offer such products by 2020. For further information, please visit AIMA’s website, www.aima.org.
The guide offers detailed insight on topics that need to be considered when setting up and offering a managed account. It includes sections on structuring, fees and expenses, and conflicts of interest. AIMA’s CEO Jack Inglis said, “managed accounts are increasingly popular among institutional investors and these segregated structures have underpinned the changing investor/manager relationship since the financial crisis. But they are not for everyone, and there are a number of issues for managers and investors to consider, ranging from minimum investment levels and regulatory changes to fees and expenses. Our Managed Accounts Guide will help managers manoeuvre this complex landscape and decide the best course of action for their businesses.” The Guide is co-sponsored by Simmons & Simmons, the law firm, and Societe Generale, the financial services group. Devarshi Saksena, Partner at Simmons & Simmons said, “we are delighted to support AIMA in this publication. We are increasingly seeing a wide range of clients structuring managed accounts in response to demand from strategic investors. 13 investorReview November 2016
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World-First Listing on CISE for Global Bitcoin Fund Global Advisors Investment Fund plc (GABI) has on 19th December been admitted to the Official List of the Channel Islands Securities Exchange (CISE) to become the first regulated bitcoin fund to be listed on any exchange globally. he CISE has approved the admission to listing of all of the redeemable participating no par value shares of the open-ended fund, which is managed by Global Advisors (Jersey) Limited (Global Advisors).
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GABI was launched in 2014 as the world’s first regulated bitcoin fund when it received certification as an Expert Fund from the Jersey Financial Services Commission. Its listing on the CISE means that it joins over 2,000 listed securities on the Exchange comprising a market capitalisation of over £300 billion. It is the first digital asset-related listing on the Exchange. Fiona Le Poidevin, CEO of the CISE, said: “I have followed GABI since its prominent launch and it is very exciting that we are able to play a part in the next chapter of this innovative structure.”
GABI is the third exchange listing for Global Advisors. The firm currently manages two Bitcoin Exchange Traded Certificates – COINXBT and COINXBE – on NASDAQ’s OMX in Stockholm. Mr Masters says that the firm is developing as a leading platform for digital assets combining digital asset management, direct market access and working with start-up firms developing distributed ledger technologies, including Glint, Gradbase and Aventus Systems. Mr Masters added: “GABI is our flagship. It provides professional management of the risks associated with holding bitcoin, and is focused on outperforming bitcoin in US dollars, which it has shown a strong track record of doing. As fund managers, we have a number of powerful tools to generate alpha, including arbitrage, pair-trading, cash and carry and coin lending.
Jonathan Bale of MJ Hudson, a specialist alternative asset law firm has been representing the firm through the listing process. Mr Bale, who is also a Director of GABI’s listing sponsor, Verras Professional Services Limited, says that GABI will now be able to demonstrate the oversight, due diligence and monitoring that comes with regulation and an exchange listing. This is testament to the hard work that Global Advisors’ principals, Daniel Masters, Jean-Marie Mognetti and Russell Newton, have put in to evolving an institutionally robust offering.” Mr Masters says the strong fundamentals of bitcoin helped push Global Advisors and GABI towards listing GABI. “The time is right. Bitcoin now has a market capitalisation of over $12.4 billion, an all-time high, with approximately 16 million coins in issue. Bitcoin is the leading digital currency, ranking 73rd in total amount in circulation on the global list of M1 forms of money. Several leading analysts are now covering the currency, with a recent report from Canaccord Genuity projecting an eight-fold increase in implied value within a decade.”
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“Today’s listing of GABI on the CISE acknowledges how far we have come over the last two years since GABI was launched as the world’s first regulated bitcoin fund, as well as the transformational role bitcoin is starting to play as a global currency and its emergence as an important, uncorrelated asset class for investors.” GABI has returned 57% (2016 year to date) to investors and listed on the CISE at 08.00 GMT on 19th December 2016. The Channel Islands Securities Exchange provides a responsive and innovative listing facility for international companies to raise capital from investors based around the globe. Please visit this website for further details: www. thecise.com.
investorReview Personnel
Accountants’ Pay Bolstered By 53% Rise in Bonuses The latest data from the Chartered Institute of Management Accountants (CIMA) and recruitment specialist, Global Accounting Network, has found that growth in bonuses is outstripping average salary increases as organisations prioritise retaining top accounting talent. he CIMA UK and Republic of Ireland Salary Survey 2016 was conducted between 20th April and 16th May 2016. All CIMA members and students were invited to participate in the survey; however, CIMA only reports on countries where base sizes are large enough for reliable data. For the UK and Republic of Ireland a total of 7,927 completed the survey from a sample of 118,801. This represents a 7% response rate overall. From these total responses, 3,460 were from students and 4,467 from members.
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While average salaries increased by 1.9% this year rising from £62,791 in 2015 to £63,991 - average bonuses increased from 8% of annual salary to 12% over the same period. This represents an average increase from £5,023 in 2015 to £7,679 in 2016, or 52.9%. The proportion of professionals who receive a bonus on top of their annual salary remains largely stable at 68%.
average salary at £50,877.
in London are generally higher.”
Commenting on the findings, Adrian O’ Connor, Founding Partner at the Global Accounting Network, said, “a national shortage of outstanding qualified management accountants means that the retention of talent is becoming increasingly important for organisations. This data confirms that employers are incentivising great performers with larger bonuses to ensure that they stick around.”
“What is perhaps more unexpected is the significant increase in average pay in the Republic of Ireland. The Irish government’s Industrial Development Authority (IDA) is actively promoting Dublin as an attractive hub for UK and US based companies who want a presence within the EU. It seems that this increase in business activity has created a spike in demand in 2016 which has subsequently driven up wages. It will be interesting to see if this trend continues if and when there is more certainty in global markets.”
“The value of annual salaries across various sectors and regions is largely unsurprising. In-house roles typically offer more attractive remuneration packages than public practice firms and the concentration of global organisations in the capital means that salaries
While average annual salaries for CIMA members increased nationally, there are notable variations in terms of region. Unsurprisingly, the highest annual salaries in the UK remain in London, where a yearon-year increase of 3.5% means that accounting professionals now take home an average of £77,174. However, Wales enjoyed the largest increase in percentage points, with average salaries increasing by 8.7% to £52,572. In the Republic of Ireland average salaries increased by 26% to reach €102,243. The fall in the value of Stirling means that, in November 2016, this is equivalent to £88,663. In January 2016, this figure would have equated to £78,048. Average salaries also fluctuated significantly between professional sectors. CIMA members working within banking enjoyed the highest average salary at £85,553. Other sectors which offer salaries above the mean average include construction & property (£74,573), media and marketing (£67,162), and technology (£66,873). CIMA Members working within the accountancy sector reported the lowest
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www.cimaglobal.com
investorReview E-Commerce Individual Savings Account
Put Some Wind Power in Your ISA for 8% Returns Abundance Investment has recently launched the first wind-energy investment which is eligible to be held tax-free in an ISA (Individual Savings Account). The scheme is to refinance the Upper Pitforthie Windgen 500 kW wind turbine in Aberdeenshire which was commissioned in August 2016 and is therefore pre-accredited for the Feed-in Tariff subsidy level prior to the recent cuts. With the subsequent reduction in FIT for onshore wind this will be the last opportunity to invest in wind on Abundance in the near term. n offer is a Variable Return Debenture with an effective average annual rate of return estimated at 7.3% - 8.5% over the 17-year investment term, with a minimum investment of just £5. The total amount available for investment is £2.3 million.
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This is the second phase of the Upper Pitforthie Windgen project, following the funding of its construction by Abundance members in November 2015 with a Debenture paying 12% over its one year term. The money raised will repay those Short-Term Debenture holders who funded the construction and allow investors to enjoy the returns from the energy generated with the risk of construction removed. People who invested in the first debenture will be able to ‘flip’ their investment directly into the new debenture. Bruce Davis, founder and managing director of Abundance said, “this is one of the last chances to invest in an onshore wind project whose returns are underpinned by a Feed-in-Tariff rate no longer available to new projects and without any construction risk. Investors will have the opportunity to effectively double their money if they hold the debenture for its full 17-year term. “Abundance members can now have a fully diversified renewable energy ISA portfolio with projects in wind, solar and biomass and over a variety of time frames - all enjoying tax-free returns.” This is the fourth ISA-eligible new renewable energy investment to be listed on Abundance since it launched the UK’s first Green Energy ISA in November. Other ISA investable technologies listed on the site have included solar and biomass giving renewable energy supporters the ability to have a fully diversified portfolio both in the technology and the term of the investment.
Over 1,200 people have now opened ISA accounts with Abundance and over £5 million has been invested through the ISA since November to fund UK renewable energy projects.
Abundance Investment has successfully raised over £35m for 22 different projects in the past four years. Abundance Investment is authorised and regulated by the Financial Conduct Authority.
Bruce added that, “the extraordinary success of our ISA so far shows what a difference it can make to the real economy in the UK. We’re making it easy for ordinary people to invest tax-free directly in the UK’s green energy infrastructure into projects that are tangible, straightforward and easy to understand. It’s a win for everyone.”
To invest in Upper Pitforthrie Windgen please visit: www.abundanceinvestment.com/app/projects/upperpitforthie-windgen-debenture-2
Other new ISA-eligible products listed on Abundance are: •
Swindon Chapel Farm solar – 20-year debenture with 6% average annual IRR over lifetime, £365k remaining.
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Monnow Valley CHP biomass – 1 year debenture with 12% IRR, now fully subscribed.
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Thrive Renewables - 7-year bond with 5% fixed interest rate, now fully subscribed for ISA. 16 investorReview November 2016
Innovative Finance ISA: The IF ISA is a new type of ISA that you can hold alongside your Cash and Stocks & Shares ISAs. It has been launched by Government to reflect the growing popularity of alternative finance platforms as a new place to save and invest for decent returns. The new IF ISA allows you to subscribe up to £15,240 in the 2016/17 tax year and protects the return on those investments from tax. You can choose to split your ISA allowance across Cash, Stocks & Shares, and IF ISAs as you please. However, you can only invest in one IF ISA in each tax year.
Find out more here: bit.ly/2hLlIpY.
investorReview E-Commerce Individual Savings Account
Total Funds in UK ISAs Likely to Almost Double 2005-2009 Research and Markets (www.researchandmarkets.com/reports/c29409) has announced the addition of Individual Savings Accounts Market Assessment 2005 to their offering.
ndividual savings accounts (ISAs) were introduced in the UK in April 1999 and replaced both personal equity plans (PEPs -- which were launched in 1987) and tax-exempt special savings accounts (TESSAs -- introduced in 1991). ISAs are a tax-efficient scheme way of saving and investing, and were designed by the UK government to encourage people to save money.
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ISAs are the UK government's primary vehicle for tax-efficient saving outside pensions. According to the 2005 Budget, announced in March 2005, more than 16 million people - around one in three adults - now have an ISA and more than GBP 160bn has been subscribed to ISAs since their launch. Cash mini ISAs are available from banks and building societies, both on the high street and online. They are a very simple product, so have a wide appeal to investors who do not understand the stock market or who do not wish to take the risks associated with investing in stocks and shares. The sector is highly competitive, with most providers offering interest rates well above the base rate. Stocks and shares ISAs appeal to investors seeking capital as well as income growth. This sector is also highly competitive and investors can choose from a large range of providers and a wide selection of investments.
will remain safe. By contrast, anyone investing in an UK equity ISA in 1999 could have seen the value of their investment fall by around 50% in the following 4 years. ISAs are distributed through a wide variety of financial institutions, and the market is highly competitive. Building societies and the major highstreet banks account for the bulk of cash ISAs, while fund managers represent the overwhelming majority of stocks and shares ISAs. The Internet is having a large indirect impact on the distribution of ISAs; not only is it easy for consumers to apply for and administer their ISA investments online, it is also a very useful research tool. Investors can now easily and quickly check which providers are offering the best rates on cash ISAs. Furthermore, the Internet is a particularly useful tool for stocks and shares investors. Previously, anyone wanting to research the performance of investment funds, such as unit and investment trusts, before choosing an ISA, would have had to scour investment magazines or rely entirely on the word of their financial adviser. However, with the Internet, potential investors can easily research the performance of funds.
In terms of volume, sales of ISAs have remained relatively steady over the 5 years from 2001 to 2005, but there was a clear decline in the popularity of stocks and shares ISAs, and a sharp rise in the volume of cash ISAs. Cash on deposit is the largest sector of the market, accounting for 62.8% of all ISA funds as at 5th April 2004. Investors have increasingly chosen to keep their savings in cash ISAs as a result of the volatility of global equities and, in particular, the sharp reverses in equities seen in the early part of the decade. Although cash ISAs offer limited scope for capital growth, investors know that their initial investment 17 investorReview November 2016
It is forecast that the market for ISAs will continue to grow robustly over the next 5 years. In fact, total funds in ISAs are likely to almost double in value over the 5-year period between 2005 and 2009 (as at 5th April). Growth in demand for cash ISAs is likely to correlate with the interest-rate cycle and the performance of global stock markets. As any investor will testify, nothing is certain in economics and economic forecasting is a notoriously hazardous activity. However, it is believed that interest rates reached their peak at 4.75% in the current interest-rate cycle -- the Bank of England cut rates by a quarter of a point to 4.5% in August 2005 -- and that they will decline further in the remainder of 2005 and the first half of 2006. Following this, they are likely to begin rising again in the remainder of 2006, signalling the start of the next interest-rate cycle. The performance of the stock market over the next 5 years is even more difficult to predict, but these forecasts for the ISAs market are based on the view that the bull run that began in March 2003 will continue in 2006, and that shares will continue to find support in the remainder of the forecast period, rising by around 5% to 8% a year. For more information visit www.researchandmarkets. com/reports/c29409.
investorReview Pensions
Pension Providers Making Good Progress on Reducing Fees and Charges Pension providers have made significant progress towards meeting the recommendations of the Independent Project Board (IPB), to reduce cost and charges, according to a new report published on 13th December by the UK’s Financial Conduct Authority (FCA) and the Department for Work and Pensions (DWP). he IPB was established in response to the Office of Fair Trading’s 2013 market study which found that £30 billion of savers’ funds in defined contributions (DC) workplace pensions were at risk of delivering poor value for money.
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The IPB recommended that scheme providers put in place plans, by the end of 2015, to reduce fees and charges to provide better value for money. As a result of this work, over a million customers within contract-based and trust-based schemes are now subject to lower charges than before. A small number of providers have put in place actions that rely on a response from another party, such as individual customers or the trustees of the scheme. Once received, this will improve the overall position across the industry further. Both the FCA
and the DWP will continue to work with providers to ensure that customers are not being disadvantaged over the long-term, especially if responses have been slow or low in number. For 16% of the assets under management in contract-based schemes, and 15% in trust-based schemes, the progress is unsatisfactory or unclear, with customers still at risk of high costs and charges. The FCA and DWP will shortly be contacting these providers and will expect them to explain the reasons behind this and to ensure that savers are being treated fairly. Andrew Bailey Chief Executive at the FCA said, “pension providers look after the savings of millions of customers and it is vital that they provide good value for money. We have seen good progress towards the goals that the IPB laid out but this is not the end of the story. Firms should continue to work
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to ensure that value for money is being consistently delivered. “There is still more to do so we will be contacting the providers who have not yet taken satisfactory actions to remedy poor value schemes and we expect them to act swiftly to ensure good value for customers.” Richard Harrington, the UK’s Minister for Pensions added, “I am pleased that more than a million pension savers will benefit from our push to curb excessive charges in legacy schemes. Nevertheless, some people are still at risk of high charges, so I shall be seeking assurances from the providers of those schemes, that they will be taking steps to resolve this issue.”
Find out more information about the FCA at: www.fca. org.uk.
investorReview Pensions
Uncertain Investment Markets – What Does This Mean for My Pension?
The unexpected election of Donald Trump to US President has led to reactions in various investment markets around the world – with speculation that market volatility will continue over the coming years. So, what does this mean if you are investing in a pension, as millions of people in the UK are? To make things a bit clearer for, the Pensions Advisory Service have outlined some of their top tips. hink long-term - don’t be swayed by short term blips or eye catching press headlines. A pension is a very-long term investment (you could have funds invested for over 30 years), so there will inevitably be short-term fluctuations. What is important is making decisions for the long-term, and unless you’re an expert fund manager this often means not making changes based on short-lived trends. And, switching regularly could mean that you incur additional fees, which might cancel out any asset growth that results.
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Stock markets can be volatile – there have always been ups and downs in stock markets but what is important is how they perform over the length of time your pension monies are invested. Focus on an asset’s underlying value – a company doesn’t become a bad-bet overnight just because of political change. Sound, well-run companies with good growth prospects will ride out short-term political distortions. A good fund manager will focus
on an asset’s underlying value and invest accordingly. Spread the risk – it’s important to make sure that your pension is invested widely to spread the week. This means you should avoid investing in a single country or industry or type of asset. So even if one territory or asset class suffers as a result of specific economic or political issues, others will be less impacted and your overall pension pot will not be impacted as much. Check what your pension fund offers you – most company pension schemes will have a “default” fund which invests in a range of assets and will tend to switch into more secure assets as you approach your planned retirement. You should check to see what investment options your pension scheme offers (read the material they send you) – and if you do not feel confident in making your own fund choices, then the default option may be the best one for you. Watch out for scammers – there are some scam operators who take advantage of market uncertainty by promising you investments which offer much
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higher returns than you are currently experiencing. If you invest in these vehicles the chances are that you will end up in one single type of high-risk investment incurring high charges. And if they don’t perform you could lose almost everything. You can find out more about pension scams and how to avoid them here. Check the value of your pension – many people tend to ignore the statements they get from their pension scheme setting out the value of their fund. It is important to keep track of how much is in your pension and what level of retirement income this might generate. This will help you to understand whether you need to take action whilst you are in a position to do so, for instance increasing your pension contributions. Get advice or guidance – if you need any further steer you may wish to consider getting independent regulated financial advice. Or for more general guidance concerning your options in more detail. Find out more here: www. pensionsadvisoryservice.org.uk/contacting-us.
investorReview E-Commerce Financial Planning
How Do Other Countries’ Business Advisers View Brexit? At the UK200Group Annual Conference held in Southampton, members from across the European Union were invited to share their views on business, with a special emphasis on the UK’s referendum decision to leave the EU. onor Mullany of Dublin-based UK200Group international member Mullany Walsh Maxwell Solicitors said, “overall, I don’t think Brexit is going to be a good thing for the Irish economy. There are obvious advantages to our financial services sector but the UK is one of our biggest trading partners and for anyone working in export it’s not going to help, especially with the shift in sterling.
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“If the UK steps out, it gives it more flexibility in terms of tax regimes so it could challenge Ireland in that way. There’s a lot of uncertainty about what the UK is going to do, but ultimately I think the disadvantages are likely to outweigh the advantages.” Marc Marsal of Barcelona-based UK200Group International Member Firm Marsal Abogados y Asesores Tributarios said, “Barcelona, where I live, is a very multicultural area, and we have a lot of British and US expatriates here, which is beneficial for our IT sector and call centres. Some of my clients are now worried that their VISAs may not be renewed and if they did have to move it would not be good for the area. “There are concerns on the coast about the British who have second homes there, who don’t know how they are going to be taxed. This is a clear problem for the European Union, and it underlines a lack of credibility. From the British point of view, I don’t understand the decision. I think it is a decision that was made emotionally rather than from a practical point of view.” Vittorio Romani of Rome-based UK200Group International Member Firm GMR Partners said, “there are companies from outside the EU who currently have offices in the UK who want to move because they are scared of Brexit from a political point of view, because they don’t know what the rules will be tomorrow. They aren’t looking to move for economic reasons – not at the moment. The only negative I can see Brexit creating for Italians is if they are importing or exporting goods to the UK – it will be like trading with a country outside of the EU.”
Member Firm McInerney Saunders, based in Dublin said, “what we have seen since the vote is an increase in activity in UK firms looking to establish operations in Ireland. Within two weeks, we’d had ten approaches from a fact-finding point of view, three of whom are still live. I think those initial enquiries were more panic-driven than anything else, and now the dust has settled people are addressing more strategic issues – how best to structure a business. What we’re seeing from both an Irish and UK side is a potential for growth. “In the financial world, it’s difficult to see someone who’s settled into a certain lifestyle in London, with children in schools in London, having the same quality of life in Dublin. I think Ireland will benefit from Brexit. Historically, we have seen a number of clients who are UK residents with Irish interests and there’s always been a crossflow of trade. With recent currency fluctuations, and we are seeing enquiries from UK entities setting up in Ireland, and from Irish entities looking at opportunities in the UK.” Patrick Scanlon of UK200Group international member Ferrieres & Co, based in Paris said, “France is looking to attract investment from companies in markets outside of the EU, but will have to address its social charges to be effective. The French government is currently extending its favourable tag regime for employees moving to France from five to eight years. “I think that France will benefit from Brexit. There will be some margin for businesses that are looking to stay within the EU, whether that’s France or Ireland, Holland or Germany. My view is that there will be at least some benefit associated with
Neal Morrison of UK200Group International 20 investorReview November 2016
remaining a central member of the EU as opposed to being outside of it.” David Macdonald of UK200Group member firm The Martlet Partnership, based in Worthing said, “I think that the UK is going to try to ensure that the effect of Brexit is negligible, but some European countries may not make that easy. Britain has to consider its tariff position and its tax position. It’s already low tax in comparison to most EU countries, although not Luxembourg, Ireland and Holland, but will undoubtedly continue to seek to attract foreign investment. Inward investment is not going to stop. “Brexit is going to make the UK more inwardlooking, which I think is not good for young people in today’s global world. Commercially, however, I’m not quite sure whether things will change as much as we first feared, it’s too soon to tell. There have been two very positive things for the government in Nissan and Google’s investments in the UK.” Declan Swan, CEO of the UK200Group, said, “our international members give us a wealth of experience and perspective from other countries, and that’s one of the reasons they’re so invaluable to the UK200Group. It’s easy to view Brexit as a British decision but in reality, it’s going to have repercussions across Europe, and our international members give UK200Group members based in the UK a real boost when helping clients explore their options in expanding to Europe.”
www.uk200group.co.uk.
investorReview E-Commerce Financial Planning
Pre-Christmas Financial Planning Going by TV commercials, the official countdown to Christmas starts right after Remembrance Sunday. In terms of financial planning, now is really the deadline for getting your Christmas in order so that you avoid going into the New Year with a financial hangover. There is one top tip, which we would like to emphasise ahead of everything else according to FCM Media.
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Plan your Christmas to suit your budget, rather than the other way around
Christmas is supposed to be about peace and goodwill, not about spending until your credit card screams. If something is too expensive for the amount of cash you have available, then it is too expensive, end of story. This goes for gifts, food, socialising and everything else connected with Christmas. If people really care about you, they’ll accommodate your financial situation. They may even be relieved at your honesty taking a strain off them. If you’re worried about receiving expensive gifts when you’ve only bought cheaper ones, then start setting expectations now, particularly for children. 2. Be firm with your budget and flexible with your shopping The first point to remember about any form of Christmas shopping is that anything which has an obvious connection with Christmas is going to carry a premium price tag. Look for ways to avoid or work around this. For example, you could avoid the typical roast-meat-and-all-the-trimmings dinner and enjoy food which is non-typical but still special, whether it’s poached salmon or curry. Likewise, you could pass on traditional Christmas cake and just go for a
normal cake or other dessert. 3. Remember the power of packaging Christmas is a time when manufacturers bring out their most attractively packaged products and many shops offer gift-wrapping services. There is, however, absolutely nothing to stop you taking items in ordinary packaging and making them look beautiful yourself. What’s more, this can often be done very easily. For example, it would probably work out much cheaper to buy a pretty, empty tin off eBay and fill it with sweets than to buy a special Christmas tin of the same sweets out of a shop.
commit to making all your presents when there is generally so much else to do this time of year? There is, however, one DIY gift, which, literally, anyone can make in minutes and which can also work perfectly for any one of any age. It is the gift of IOU vouchers. For example, instead of giving your child the current, must-have, toy, give them a voucher to stay up an extra hour on Fridays, Saturdays or school holidays. Make a voucher single use, or multi-use (just make sure multi-use vouchers have a way to track how often they’ve been used). 5. Practice saying no
Likewise, many gifts can be put into pretty baskets and will look just fine without being covered in cellophane. This is an excellent solution for toiletries. Basically, it’s a safe bet that any kind of pre-packaged gift set can be recreated more cheaply without any crafting skills being necessary. 4. Give creative IOUs instead of shop-bought (or crafted) gifts In spite of what the internet might suggest, crafting can work out just as expensive as shop bought and that’s even before you factor in the reality that your time also has a value. Even if you have a craft hobby which you enjoy, are you really going to want to
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Whatever your views on Christmas, it’s hard to argue that it’s become increasingly commercialised over the years, to the point where people can feel under pressure not only to spend more than they can afford on their nearest and dearest, but also to give gifts or at least cards to an ever-widening circle of people and then, of course, there is the growing practice of the Secret Santa. On top of all this, there may be pressure to attend events you would prefer to avoid. Practice saying no. It saves both money and stress.
fcmmedia.co.uk
investorReview Long-term Investments
Could Santa Have a Present or a Lump of Coal for the Markets Year? After the initial response to the US election and the Thanksgiving holiday, Colin Cieszynski – CFA, CMT, CFTe Chief Market Strategist CMC Markets – considers what traders will now be turning their attention to at the end of the year, and what 2017 may have in store for the markets. Within this special report, Colin Cieszynski focuses on: • The historical importance of the December trading period, often referred to as the Santa Rally for the boost it gives average stock prices; • The role the final Fed meeting plays in the Santa Rally; • How the US Presidential cycle has historically impacted the Dow index returns average and; • Whether we are in for a market correction, or continued stocks rally in the wake of Trump’s election. MC markets is Canada's leading online CFD provider and was the first company in the world to offer online FX trading. With offices in Toronto, CMC Markets has been offering CFDs and FX to Canadian traders since 2005. Since Peter Cruddas founded CMC Markets in 1989, the company now services more than 80,000 clients worldwide, who placed approximately 30 million trades last year.
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This commentary is based upon technical analysis. Technical analysis does not consider any of the fundamentals of an underlying company, and as such is inherently uncertain and should not be the only factor considered by an investor in making an investment decision. CMC Markets Canada Inc. is also a member of the Investment Industry Regulatory Organization of Canada and Member-Canadian Investor Protection Fund / Membre-Fonds canadien de protection des épargnants. CFDs are distributed in Canada by CMC Markets Canada Inc. dealer and agent of CMC Markets UK plc. Trading CFDs and FX involves a high degree of risk and investors should be prepared for the risk of losing their entire investment and losing further amounts. CMC Markets is an execution only dealer and does not provide investment advice or recommendations regarding the purchase or sale of any securities. CFD and FX trading is available in jurisdictions in which CMC is registered or exempt from registration, and in Alberta is available to Accredited Investors only.
Historically, December has been the second strongest month of the year on average for stocks, a phenomenon known as the Santa Claus rally. This is apparently due to an end to tax loss selling and adjustments which bring current expectations in line with reality, plus the hope that the coming year may be a better one for corporate earnings and the global economy. This burst of optimism sometimes continues into January, creating a New Year’s rally, but often fades, leaving January less positive on average than other months.
enthusiasm about the New-Year may quickly be cooled by corporate results and guidance.
A look at average daily returns over the last two decades in December and January show even through a seasonally strong period, markets can experience ups and downs. Historically, December has started out positive but then seen some weakness toward mid-month, particularly between the 11th and the 15th which is likely the peak of tax loss selling and portfolio adjustments going through.
In all of the cases since Nixon was elected in 1968, for each new President, one of November or December and one of January or February was positive and one was negative. In the case of President Eisenhower in 1952, November and December were positive but January and February were negative.
The strongest days for the markets run from December 16th through to 26th. This is the time most associated with the Santa Claus Rally and appears to start after the final Fed meeting of the year. The two holiday weeks are typically either flat, or slightly positive, and usually see lighter than usual volumes with many traders off on holiday and shortened weeks. From 7th of January onwards, returns tend to be negative, particularly around 12th to 16th, which coincides with the start of earnings season for companies. This suggests that initial
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In 2016, in addition to the usual seasonal cycles, we also have a Presidential cycle at work, which may take more precedence with a new president and party coming in to power. The table below which looks at what happened to the Dow in the months after a new Republican was elected since 1950 shows that results through the transition phase have historically been quite mixed.
This market action suggests indecision and trepidation among traders about what the new incoming President may do and what changes they may make to the direction of the country and the economy. This year, following the election of Donald Trump, the market staged its biggest Republican win rally since Reagan in 1980. Based on that, we could see a retrenchment and correction this month. If the markets do remain positive through December and postpone the common pullback, we run the risk of a significant correction through January and February. For more information please contact: www.teamspirit. uk.com.
investorReview Long-term Investments
FCA Publishes Interim Feedback on Crowdfunding Rules On 9th December, the Financial Conduct Authority (FCA) gave an update on the postimplementation review of the loan-based and investment-based crowdfunding market. Their earlier call for input raised a number of issues for discussion; the feedback statement provides a first response to the feedback received and sets out the next steps. ased on a review of the feedback received, issues seen during the supervision of crowdfunding platforms currently trading and consideration of applications from firms seeking full authorisation, the FCA believes it is appropriate to modify a number of rules for the market.
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Initial findings Loan-based and investment-based crowdfunding For both loan-based and investment-based crowdfunding platforms they have found that, for example: • It is difficult for investors to compare platforms with each other or to compare crowdfunding with other asset classes due to complex and often unclear product offerings; • It is difficult for investors to assess the risks and returns of investing on a platform; • Financial promotions do not always meet their requirement to be ‘clear, fair and not misleading’ and; • The complex structures of some firms introduce operational risks and/or conflicts of interest that are not being managed sufficiently. Loan-based crowdfunding In the loan-based crowdfunding market in particular they are concerned that, for example: • Certain features, such as some of the provision funds used by platforms, introduce risks to investors that are not adequately disclosed and may not be sufficiently understood by investors; • The plans some firms have for wind-down in the event of their failure are inadequate to successfully run-off loan books to maturity and; • The FCA have challenged some firms to improve their client money handling standards.
For loan-based crowdfunding, the FCA also intend to consult on: • Strengthening rules on wind-down plans; • Additional requirements or restrictions on cross-platform investment and; • Extending mortgage-lending standards to loan-based platforms. The FCA’s current rules on loan-based and investment-based crowdfunding platforms came into force in April 2014. They aimed to create a proportionate regulatory framework that provided adequate investor protection whilst allowing for innovation and growth in the market. The call for input in July 2016 launched a postimplementation review of these rules. The paper summarised market developments since 2014 and some of the FCA’s emerging concerns. Andrew Bailey, Chief Executive of the FCA said, “our focus is ensuring that investor protections are appropriate for the risks in the crowdfunding sector while continuing to promote effective competition in the interests of consumers. Based on our findings to date, we believe it is necessary to strengthen investor protection in a number of areas. We plan to consult next year on new rules to address the issues we have identified.”
Proposals for new rules to be considered in Q1 2017 The FCA plan to consult on additional rules in a number of areas. These include more prescriptive requirements on the content and timing of disclosures by both loan-based and investment-based crowdfunding platforms. 23 investorReview November 2016
Further work Their on-going research and investigatory work should be completed early in 2017. At that stage, the FCA will complete the post-implementation review and determine whether further consultation on rule changes is needed. Responding to his update from the FCA on proposed new rules for the crowdfunding sector, RSM financial services partner Damian Webb commented, “the increased focus and oversight in the peer to peer sector has to be welcomed. The peer to peer sector has grown exponentially over the past five years, from small start-ups we now have large established financial institutions. The sector has benefitted from the ‘light touch’ approach previously adopted by the FCA but noting the current and forecast scale of these institutions it is only right that the FCA looks to bring the sector in line with existing regulations and best practice. “There is a real risk that in the absence of the FCA regularising the sector, practices could emerge which undermine the position of investors. Any fall-out could fundamentally undermine our growing FinTech sector and undermine the UK’s reputation for financial probity.” www.fca.org.uk
investorReview Long-term Investments
New Centre Aims to Help Financial Investors Manage Climate Risks A new centre that will help businesses to make better green investment decisions was launched on 14th November. The new Centre for Climate Finance and Investment at Imperial College Business School will work with companies to manage the risks and financial opportunities posed by climate change. mperial College London is one of the world's leading universities. The College's 16,000 students and 8,000 staff are expanding the frontiers of knowledge in science, medicine, engineering and business, and translating their discoveries into benefits for society. Founded in 1907, Imperial builds on a distinguished past having pioneered penicillin, holography and fibre optics - to shape the future. Imperial researchers work across disciplines to improve health and wellbeing, understand the natural world, engineer novel solutions and lead the data revolution. This blend of academic excellence and its real-world application feeds into Imperial's exceptional learning environment, where students participate in research to push the limits of their degrees.
emerging industrial sectors such as clean energy, energy efficiency and climate-resilient infrastructure.
Imperial collaborates widely to achieve greater impact. It works with the NHS to improve healthcare in west London, is a leading partner in research and education within the European Union, and is the UK's number one research collaborator with China. Imperial has nine London campuses, including its White City Campus: a research and innovation centre that is in its initial stages of development in west London. At White City, researchers, businesses and higher education partners will co-locate to create value from ideas on a global scale.
Dr Charles Donovan, Head of the Centre for Climate Finance and Investment at Imperial College Business School said, “every year a trillion dollars of investment in the energy sector could be wasted simply because the majority of investors don’t understand the risks or opportunities presented by climate change. However, until now there simply hasn’t been enough good information to give business leaders the ability to accurately assess the risks and returns of making a transition to a lowcarbon economy."
The centre will help businesses make better financial decisions when choosing to invest in technologies that help stabilise the climate, whilst providing a good return on investment. These areas include solar and wind energy, and energy efficient transport.
He continued, “climate change has already created major political and technological changes that are disrupting a number of business sectors. Adapting intelligently to these changes is not just about the environmental agenda for companies, it’s about how they survive and thrive amidst a climate of risk. The new research centre will help businesses avoid the serious impact of climate change, whilst raising the prospects for global economic growth.”
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The centre will be the first of its kind to tackle green investment issues within a leading business school, building on Imperial College London’s global reputation for innovative research on climate change. Researchers will help investors identify the risks and financial opportunities posed by climate disruption and address the current lack of information on
Researchers from Imperial College Business School will examine how large firms, SMEs and entrepreneurs are already responding to climate change and will recommend new approaches to solving investment issues. The centre will support research by established experts and emerging scholars on the business models, financial instruments, and investment strategies that are taking shape in the new climate economy. It aims to contribute to the global debate on climate investment through academic research, and collaborations with businesses and policymakers, to address the key issues.
The work of the centre will be divided into three main themes: tools for financing climate-ready infrastructure; routes to sourcing clean energy
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investing (new forms of investing and the barriers to business growth); and managing firms in carbon-constrained economies (financial returns on sustainable business management and the impact of carbon pricing). The new centre follows the launch of a new MSc in Climate Change, Management and Finance, which started in September 2016. The one year’s Master's degree was launched by Imperial College Business School in partnership with the Grantham Institute - Climate Change and the Environment, which is Imperial's hub for climate change-related activities. The course aims to equip graduates with the skills needed to tackle the business challenges caused by climate change. Professor Martin Siegert, Co-Director of the Grantham Institute welcomed the new research centre. “We are delighted that this new centre will be driving forward much-needed academic research in climate finance and investment. We look forward to supporting the centre's development and activities, helping to build up networks beyond academia, to maximise the impact this work can have in the business and policy community.” At the UN Climate change conference (COP22) in Marrakech, Imperial College London is teaming up with the Institution of Chemical Engineers and Natural Resources Defense Council (NRDC) to discuss the financial mechanisms needed to encourage investment in low-carbon technologies and storage to stimulate a step change in deployment of the more mature technologies. The event, ‘Investing in the planet: Green banks and other financial tools to scale up mitigation technologies’ took take place at the COP22 Conference centre on 14 November 2016.
www3.imperial.ac.uk
investorReview Winners List 2016 Financial Advisor of the Year Company: MitchellProckter Financial Services Limited Name: Gary Mitchell Email: info@mp-fs.co.uk Web Address: www.mitchellprockter.co.uk Address: 15 Grove Place, Bedford, MK40 3JJ, UK Telephone: 01234 344690
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