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Tatton Investment Management Tatton Business Update 50bps platform + DFM overlay for all Market Update A function of

Tatton Investment Management Tatton Business Update 50bps platform + DFM overlay for all Market Update A function of confidence. Lothar Mentel Chief Investment Officer Paradigm Group. October 2013. Tatton Investment Management Tatton Business Update

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Tatton Investment Management Tatton Business Update 50bps platform + DFM overlay for all Market Update A function of

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  1. Tatton Investment ManagementTatton Business Update 50bps platform + DFM overlay for all Market Update A function of confidence Lothar Mentel Chief Investment Officer Paradigm Group October 2013

  2. Tatton Investment ManagementTatton Business Update 50bps platform + DFM overlay for all Lothar Mentel Chief Investment Officer Paradigm Group October 2013

  3. Tatton IM – DFM overlay for model portfolios on platform The Tatton DFM takes over where model portfolios experience limitations No additional charge to clients on Paradigm Nucleus, +0.15% on Amber +0.30% on all other platforms

  4. Tatton DFM – ‘über’ - competitive Tatton-DFM - ‘über’ - competitive

  5. Tatton DFM - from Live to LIFT-OFF

  6. Tatton DFM Overlay – Growing rapidly • 61 Partner firms signed up, representing… • £543 million of target model AuM • 41 firms submitting business • 33 firms in sign-up • 754+ client portfolios invested • £45mn of Tatton portfolios invested • £315mn total Tatton AuM, including Prism funds

  7. Exclusion of UK gilts (Jan 2013) Exclusion of Japan from 20 May to 25 June, on valuation concerns Ad-hoc rebalancing on 25 June after equity market falls 14 August rebalance for EM increase and realignment to Ibbotson 19 September shortening of duration of remaining bond holdings form ~ 5 to ~ 2 years Merging of ISA and non-ISA variants Tatton IM – 2013 portfolio activity OBSR to Tatton Active Managed OBSR

  8. Tatton IM – Adding value: Income +1.4% Source: Morningstar

  9. Tatton IM – Adding value: Balanced +1.6% Source: Morningstar

  10. Tatton IM – Adding value: Aggressive +1.0% Source: Morningstar

  11. Key points • Model portfolio DFM overlay for IFA and Hybrid/Restricted • Platform only – 50bps bundle only on Nucleus and Amber • OBSR, Vanguard and mixed models as basis • Avoidance of overvalued asset classes • Rebalancing and fund switches more regularly - without need for individual consent

  12. Tatton Investment ManagementMarket Update A function of confidence Lothar Mentel Chief Investment Officer Paradigm Group October 2013

  13. 25 year investment return perspective Source: Morningstar Bonds/Gilts falling back

  14. The recovery so far – let’s recap Source: Morningstar Financial Crisis and the Great Recession

  15. Stage 1 – The Shock– From over-confidence to no confidence 2008 / 2009 Source: Morningstar Financial Crisis and the Great Recession

  16. Stage 2 – Intervention and Snap Recovery – Confidence regained Source: Morningstar Governments step in and save the system 1st false start

  17. Stage 2 – Intervention and Snap Recovery – Confidence regained 2009 / 2010 Source: Morningstar Governments step in and save the system 1st false start

  18. Stage 3 – Euro-crisis part I and QE1 – Doubts return Source: Morningstar Governments lose confidence themselves

  19. Stage 3 – Euro-crisis part I and QE1 – Doubts return 2010 – Jan 2011 Source: Morningstar Governments lose confidence themselves

  20. Stage 4 – QE + EU bail-outs build up confidence … short term Source: Morningstar Arab spring, Japanese tsunami, first Fiscal Cliff rekindle Euro crisis 2nd false start

  21. Stage 4 – QE + EU bail-outs build up confidence … short term 2011 Source: Morningstar Arab spring, Japanese tsunami, first Fiscal Cliff rekindle Euro crisis 2nd false start

  22. Stage 5 – ECB ‘Whatever it takes’ + relative ‘Quiet’ Source: Morningstar Self healing takes hold - 3rd time lucky? Watch out for irresponsible US Republican politicians!

  23. Stage 5 – ECB ‘Whatever it takes’ + relative ‘Quiet’ 2012 / 2013 Source: Morningstar Self healing takes hold - 3rd time lucky? Watch out for irresponsible US Republican politicians!

  24. Recovery in the hands of politicians Thank God US Congress avoided default at the 11th hour!

  25. Recovery in the hands of politicians Paradox: Budget deficit falling rapidly through GDP growth

  26. Logic of the stock market recovery • 1st Recovery (2009) : Realisation that the world isn’t ending • 2nd Leg up (late 2010) : EU will bail out countries • 3rd Leg up (late 2012) : ECB will ‘do what it takes’ • 2009 - 2013 market recovery product of normalising confidence and QE money substituting confidence lacking investors • Company profits have grown through efficiency gains, not sales growth • If confidence returns permanently QE can be replaced and economies grow again Confidence is now a very fragile commodity

  27. Equities not expensive, despite the rally Developed western markets Emerging markets Source: Bloomberg PE ratios show equity valuations with upside potential

  28. Outlook: Positive but still vulnerable • Equity market will prevail now US deadlock has been postponed • Confidence levels key to speed of further recovery • Bonds will continue to fall • This economic recovery has much, much longer to go before ‘overheating’ Follow our views in Tatton’s Weekly Comment

  29. Time for a breakout? Possible, but not yet certain

  30. Important notice Tatton Investment Management Ltd 4 Lombard Street, London EC2N 1AR Tel: 0207 190 2960 Important Information This document is solely for the use of professionals and is not for general public distribution. This document is intended solely for the use of professionals, defined as Eligible Counterparties or Professional Clients, and is not for general public distribution. Past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested. Tax assumptions and reliefs depend upon an investor’s particular circumstances and may change if those circumstances or the law change. If you invest through a third party provider you are advised to consult them directly as charges, performance and terms and conditions may differ materially. Nothing in this document is intended to or should be construed as advice. This document is not a recommendation to sell or purchase any investment. It does not form part of any contract for the sale or purchase of any investment. Any investment application will be made solely on the basis of the information contained in the Prospectus (including all relevant covering documents), which will contain investment restrictions. This document is intended as a summary only and potential investors must read the prospectus, and where relevant, the key investor information document before investing. Issued in the UK by Tatton Investment Management

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