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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
50bps platform + DFM overlay for all
Lothar Mentel
Chief Investment Officer Paradigm Group
October 2013
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
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Tatton-DFM - ‘Über’ - competitive
(on-platform)
TattonComparison
DFM of–DFM
‘über’
- competitive
charges
DFM
Tatton IM on Paradigm Nucleus
Annual fee*
Incl.
platform
0
50
12.5
50
Tatton IM on Transact and other
25
60
Novia inhouse
25
80
Brewin Dolphin
30
Vestra
35
Standard Life Wealth
36
Bestinvest
40
Tatton IM on Amber
Brooks McDonald
60-75
Source: Citywire Wealth Adviser
* fees shown are subject to VAT
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Tatton DFM - from Live to LIFT-OFF
Tatton DFM Assets under Management
50
45
40
£ Million
35
30
25
20
15
10
5
0
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Since launch
Tatton DFM Assets under Management in £ Million
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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
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Tatton IM – 2013 portfolio activity
OBSR to Tatton Active Managed OBSR
1. Exclusion of UK gilts (Jan 2013)
2. Exclusion of Japan from 20 May to 25 June, on valuation concerns
3. Ad-hoc rebalancing on 25 June after equity market falls
4. 14 August rebalance for EM increase and realignment to Ibbotson
5. 19 September shortening of duration of remaining bond holdings form ~ 5 to ~ 2 years
6. Merging of ISA and non-ISA variants
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Tatton IM – Adding value: Income
+1.4%
Source: Morningstar
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Tatton IM – Adding value: Balanced +1.6%
Source: Morningstar
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Tatton IM – Adding value: Aggressive +1.0%
Source: Morningstar
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Key points
1. Model portfolio DFM overlay for IFA and Hybrid/Restricted
2. Platform only – 50bps bundle only on Nucleus and Amber
3. OBSR, Vanguard and mixed models as basis
4. Avoidance of overvalued asset classes
5. Rebalancing and fund switches more regularly - without need for individual consent
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Tatton
Investment Management
Market Update
A function of confidence
Lothar Mentel
Chief Investment Officer Paradigm Group
October 2013
25 year investment return perspective
Source: Morningstar
Bonds/Gilts falling back
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The recovery so far – let’s recap
Source: Morningstar
Financial Crisis and the Great Recession
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Stage 1 – The Shock– From over-confidence to no confidence
2008 / 2009
Source: Morningstar
Financial Crisis and the Great Recession
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Stage 2 – Intervention and Snap Recovery – Confidence regained
Source: Morningstar
Governments step in and save the system
1st false start
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Stage 2 – Intervention and Snap Recovery – Confidence
regained
2009 / 2010
Source:
Morningstar
Governments step in and save the system
1st false start
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Stage 3 – Euro-crisis part I and QE1 – Doubts return
Source: Morningstar
Governments lose confidence themselves
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Stage 3 – Euro-crisis part I and QE1 – Doubts return
2010 – Jan 2011
Source:
Morningstar
Governments lose confidence themselves
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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
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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
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Stage 5 – ECB ‘Whatever it takes’ + relative ‘Quiet’
Source: Morningstar
Self healing takes hold - 3rd time lucky?
Watch out for irresponsible US Republican politicians!
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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!
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Recovery in the hands of politicians
Thank God US Congress avoided default at the 11th hour!
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Recovery in the hands of politicians
Paradox: Budget deficit falling rapidly through GDP growth
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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
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Equities not expensive, despite the rally
Developed western markets
Emerging markets
Source: Bloomberg
PE ratios show equity valuations with upside potential
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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
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Time for a breakout?
Possible, but not yet certain
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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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