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WAVERTON INVESTMENT MANAGEMENT BREAKFAST BRIEFING
13th September 2016
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AGENDA
PLEASE SAVE THE DATE! We hope you’ll also join us at our
next seminar:
29th November
The U.S. After The November Elections:
Will The Global Economy's Engine Keep Firing?
Warren Smith, Partner, Global Strategy, MRB
Coffee
Close
8:00am
8:30am
10:00am
Waverton Global Equity
William Kenney, Director Global Equities, Waverton
9:10am
Diversifying Your SIPP Assets
Martin Tilley, Director, Dentons Pension Management
9:25am
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WAVERTON GLOBAL EQUITY
September 2016
FOR PROFESSIONAL INVESTORS ONLY
NOT TO BE DISTRIBUTED TO OR RELIED UPON BY RETAIL CLIENTS
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Waverton Investment Management
THE GLOBAL EQUITIES CHALLENGE
Investment Objective Deliver superior risk-adjusted global equity returns
Why global equities?
Large and diverse opportunity set
Participate in corporate wealth creation
Challenges Huge complexity of data and information
Demanding to cover and analyse 3,000+ stocks
Difficult to implement portfolios effectively for clients
Global equity investment is an exercise in managing complexity
4
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Waverton Investment Management
WAVERTON GLOBAL EQUITY APPROACH
How we deliver? Stock specific approach – we can measure, compare and value stocks
Differentiated investment process based on financial axioms
Experienced team
Custom built proprietary technology drives productivity, effectiveness and
implementation
Out-measure, out-compare and out-value the market
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Waverton Investment Management
DOING THINGS DIFFERENTLY – CORPORATE LIFE CYCLE
Use corporate Life Cycle to identify shareholder wealth creation
Identify
Accelerating Compounding Slowing & Maturing Mature Turnaround
Increase Returns
Grow rapidly
Maintain Returns
Growth most
valuable
Defend Returns
Growth/Returns more
balanced
Improve Returns
Growth less
important
Increase Returns
Shrink weak assets
Complete Corporates can create wealth at any point in the corporate Life Cycle
Life Cycle Specific Best operational & capital allocation strategies vary by Life Cycle position
Economic
Return on
Productive
Capital
Required Return
6
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Waverton Investment Management
STOCK EXAMPLES
Identify attractive investment opportunities across the Life Cycle
Accelerating Compounding Slowing & Maturing Mature Turnaround
Le
ve
l
7
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Waverton Investment Management
LIFE CYCLE - REGION
Economic
Return
Required
Return
Accelerating Compounding Slowing & Maturing Mature Turnaround
US 18% 30% 26% 12% 13%
Australia 13% 13% 39% 15% 20%
Japan 6% 9% 8% 18% 59%
UK 8% 23% 19% 19% 32%
Eurozone 10% 17% 21% 25% 28%
Emerging 16% 14% 27% 23% 20%
MSCI World 15% 25% 24% 15% 21%
Source: Waverton, August 2016. Developed is MSCI World Index weighted.
Emerging is average >$5b market cap 8
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Waverton Investment Management
OUR PROPOSITION
Managing global complexity Stock-specific approach
Expert use of an economic return framework
Corporate Life Cycle concept
Competitive Advantage Out-measure, out-compare and out-value the market
Differentiated stock investments and market insights
Proposition Steward investors’ capital to shareholder wealth creation globally
Focus on attractive valuations
Steward capital towards attractively-valued shareholder wealth creation globally
9
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Waverton Investment Management
RISK WARNINGS
Past performance is no guarantee of future results and the value of such investments and their strategies may
fall as well as rise. You may not get back your initial investment. Capital security is not guaranteed.
The information provided does not constitute investment advice and it should not be relied on as such. It
should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any
investor's particular investment objectives, strategies, tax status or investment horizon.
The opinions expressed are based on current market conditions and are subject to change. The portfolio may
invest in assets which are not readily realisable or where there is counterparty risk.
10
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Waverton Investment Management
FURTHER INFORMATION Where Waverton’s advice is given it is restricted to discretionary investment management services. We do not provide advice on the use of tax
or financial planning products (even if the service which we are managing is held within such a product) or non discretionary investment.
This material is for your private information and should not be distributed further.
We encourage you to consult tax or financial adviser.
All materials have been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty
as to the current accuracy of, nor liability for, decisions based on such information.
Should you require anything further in respect of the information included in this presentation please address all enquiries to:
William Kenney
Waverton Investment Management Limited
16 Babmaes Street
London
SW1Y 6AH
Authorised and Regulated by the Financial Conduct Authority, Registered in England No 2042285
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Martin Tilley
Director of Technical Services
Dentons Pension Management Limited.
Waverton Breakfast Seminar
13 September 2016
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An introduction to Dentons.
> Bespoke SIPP and SSAS provider
> Established over 36 Years
> 4200+ SIPPs
> 750+ SSAS
> AUA circa £3bn
> Finalytiq rating B: Good
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Where have our clients invested?
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What are ‘others’?
> Gold
> UK Private Equity
> Loans to Unconnected Parties
> Unregulated Collective Investment Schemes
> Intellectual Property
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Gold.
> Must be 99.5%
pure
> Recognised
Bars or Ingots
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Gold.
> Safely stored
> ‘Spreads’
> Costs
> Restriction to trade
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UK Private Equity.
> Must not own with others or
control a trading entity
> Must not be an ‘influential
shareholder’
> Trading companies – taxable
property
> Investment companies
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Asset acceptance - Unquoted Shares.
Company A
Shareholders %
Shareholder 1 30
Shareholder 2 21
Shareholder 3 15
Shareholder 4 8
Shareholder 5 6
Shareholder 6 4
Shareholder 7 4
Shareholder 8 4
Shareholder 9 4
Shareholder 10 4
Company B
Shareholders %
Shareholder 1 24
Shareholder 2 24
Shareholder 3 24
Shareholder 4 24
SIPP 5 4
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Loans to Unconnected Companies.
> ‘P2P’ still doesn’t work
> Financially sound company
> Secured loans up to 95%
> Unsecured loans up to 50%
> What is adequate security?
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Unregulated Collective Investment Schemes.
> HNW/ Sophisticated
Investor
> Individually assessed-
(third party)
> Liquidity may restrict
permitted investment
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Intellectual Property.
> Trademarks
> Patents
> Copyrights
> Domain names
> Valuation
> Management
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Commercial Property.
> Member co-trustee
> Solicitor/ Valuer/
Insurer/ manager
> Control
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Property - mixed usage.
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Shop - flat above.
Shop
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Shop - flat above.
Shop Shop
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Shop - flat above.
Original freehold value £200,000
Commercial long lease £195,000
Freehold, Residential £5,000
Reversion and Ground rent
> SDLT
> Valuations
> Conveyance cost
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High Earner
with
Commercial
Property.
> Individual whose earnings are
£180,000 pa (Higher Rate)
> Includes rental income of
£30,000 pa from commercial
property
> Property valued at £400,000
> SIPP valued at £460,000
Case study
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Solution: > Purchase property outright
Case study
Outcomes:
> Only one months rent transferred
> Future rent tax exempt
> Future CGT tax exempt
> Client CGT tax charge
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Solution: > Purchase property in stages
> Contribute part of property in
specie
> Combination of above
Case study
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Property £400,000.
SIPP purchase 40%
Client in specie
contribution 10%
SIPP purchase 40%
Client in specie
contribution 10%
Tax year
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Outcomes. > Contribution in year 1 reduces client’s income to beneath threshold
> No CGT payable in year 1
> Contribution and redirected rent reduces client’s income beneath
threshold in year 2
> No CGT payable in year 2
> Secure income to pension
> Cash liquidity to client
> Investment opportunities for personal and remaining pension cash
Considerations: Fees Connected transaction
Stamp Duty Method of payment
Case study
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Company with
mortgage
Commercial
Property.
> Company owns property £400,000
> Company profitable
> Mortgage £180,000
> Paying off mortgage would be from
post taxed profits
Case study
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Solution: > Establish pension scheme
> Pay contribution to scheme
> Scheme purchases 25% of property
> Company repays part of mortgage
Case study
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Outcomes.
> Part property owned by scheme (tax advantages)
> Bank borrowing reduced
> Tax relief on contribution (mortgage repayment)
> Works for individuals as well as companies
Considerations: Corporate tax on gain on disposal
Stamp Duty
Fees
Connected transactions
Case study
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Proposed property of £900k.
Capital Borrowing Buying Power
Pension 1 200k 100k 300k
Pension 2 200k 100k 300k
Company 150k 150k 300k
900k
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Company
40%
Side Trust
200
100 100
200
150 150
Capital
Borrowing
1/3 1/3 1/3
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Company
40%
Side Trust
200
100 100
200
150 150
Capital
Borrowing
1/3 1/3 1/3
40k 40k
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Company
40%
Side Trust
240
120 120
240
150 30
Capital
Borrowing
2/5 2/5 1/5
120k
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Taxable assets.
> Residential Property
> Works of Art
> Fine Wine
> Classic Cars
> Silver
> Anything ‘ Movable’
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Declined assets.
> Carbon Credits
> Biofuel Plantations
> Teak Plantations
> Fractional Land
(Eastern Europe!)
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Dentons Pension Management Ltd
Sutton House, Weyside Park
Catteshall Lane, Godalming
Surrey GU7 1XE
T 01483 521 521
F 01483 521 515
W www.dentonspensions.co.uk
Disclaimer
Authorised and regulated by the Financial Conduct Authority
Although every effort has been made to ensure that information provided by the speakers
and all documentation associated with the seminar is accurate and correct the information
provided does not constitute any form of advice, recommendation or opinion. Dentons
Pension Management Limited accept no liability for any loss or damage, howsoever
caused, as a result of any reliance on any information provided. The information provided
is intended for the attendees of the Seminar only.
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Dentons Pension Management Ltd
Sutton House, Weyside Park
Catteshall Lane, Godalming
Surrey GU7 1XE
T 01483 521 521
F 01483 521 515
W www.dentonspensions.co.uk
Any Questions IIC 3* Exceptional
Defaqto 5*
Financial Adviser Service Awards 5* 2012, 2013 and 2015
Authorised and regulated by the Financial Conduct Authority
Martin Tilley APMI DipPFS
Director of Technical Services
Dentons Pension Management Limited
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We hope you’ll join us at our next seminar later in the year:
29th November
Feedback Forms We would delighted to hear your views on this morning’s seminar and would be
grateful if you would take a few moments to complete the short feedback forms
on your chairs.
Thank you very much for joining us!