STOCKS | FUNDS | INVESTMENT TRUSTS | PENSIONS AND SAVINGS

VOL 20 / ISSUE 13 / 05 APRIL 2018 / £4.49 SHARES WE MAKE INVESTING EASIER WILL TECH SECTOR SELL-OFF LEAD TO TAKEOVER INVESTING FRENZY? THROUGH THE GENERATIONS THE BEST WAYS FOR PEOPLE OF DIFFERENT AGES TO BUILD WEALTH

SPOTTING DIVIDEND OPPORTUNITIES HOW DOES A FUND SURVIVE WHEN IN A FEW SIMPLE STEPS A STAR MANAGER DEPARTS?

THE BEST WAYS TO USE HISTORIC PERFORMANCE DATA TO ASSESS NEW INVESTMENTS EDITOR’S VIEW How to spot decent dividend opportunities Falling share prices can result in higher dividend yields... time to go shopping?

hile this year’s stock market weakness THE FINAL NINE: is bad from a capital returns perspective, OUR SEARCH FOR DIVIDEND OPPPORTUNITIES W it does have some benefits from a PRE-TAX FREE CASH dividend perspective. A reduced share price will STOCK PE PROFIT FLOW DIVIDEND YIELD serve to push up dividend yields, assuming there GROWTH COVER is no change to dividend forecasts as a result of Aviva 8.6 27.8% 1.6 6.1% earnings pressures. Berkeley 7.3 11.0% 2.7 4.7% Therefore now could be a good time to look for BHP Billiton 11.6 25.3% 1.9 5.4% some high quality dividend-paying stocks, avoiding G4S 12.7 20.3% 1.8 4.1% those that trade on high valuations and only picking Greencore 9.0 22.9% 1.9 4.1% companies which generate sufficient cash flow to Man 13.0 24.2% 1.6 5.1% fund the dividend. Royal Dutch Shell 13.5 44.5% 1.6 5.9% Royal Mail 12.8 15.2% 2.0 4.4% WHAT’S ON OFFER? Sainsbury (J) 11.7 5.4% 2.1 4.4% Sixty two companies in the FTSE 350 index now Source: SharePad. All data based on forecasts & share price 3 April 2018. have a prospective dividend yield greater than 5%, according to SharePad data. And 109 stocks have dividend cover, stipulating a minimum cover ratio at least 4% prospective yield. of 1.5-times. That means a company is expected to There are a few points to consider before you generate at least 1.5 times as much free cash flow start researching potential income investments. as its forecast dividend payment. We also searched for stocks yielding 4% or more; 1. ARE THE SHARES EXPENSIVE, EVEN AFTER are trading in a forward price-to-earnings (PE) range THE GLOBAL MARKET SELL-OFF? of 7 to 17; and have a minimum 5% forecast pre-tax It is important to never overpay for investments. profit growth. You must look closely at different valuation AJ Bell’s latest Dividend Dashboard report says metrics and make a judgment as to whether the the 10 highest forecast dividend yields in the current rating is justified based on a company’s FTSE 100 are starting to look ‘questionably high’. expected earnings growth, market position and Many of these stocks have seen share price declines competitive advantage. for some time because of company or industry- specific issues and not simply dragged down as a 2. IS THE DIVIDEND COMFORTABLY result of February’s broad market sell-off. COVERED BY FREE CASH FLOW? As such, we’ve applied a filter to say shares in Free cash flow is cash generated from operations, our search results mustn’t have had a negative less the amount of money a company needs to share price performance in the six months before reinvest back in its business to keep it competitive. February’s market decline. The end result is a list The money left over after capital expenditure of nine stocks as seen in the accompanying table can be used to develop new products, make (and none feature in the FTSE 100’s top 10 highest acquisitions, reduce debt and pay dividends. forecast yielders). This won’t be a perfect list as forecasts aren’t HOW TO FIND FREE CASH FLOW DATA always correct and shares are still vulnerable to For this article we used SharePad which is one of market volatility. However, it provides a good several financial data websites that let you filter starting point for you to undertake further the markets. We looked at forecast free cash flow research. (DC)

2 | SHARES | 05 April 2018 Take theroadless travelledwith somebody who knowsitwell. LET’STALKHOW.

FIDELITYASIAN VALUES PLC So,ifyou wanttoexplorearoadlesstravelled,thenFidelity AsianValues PLCcould be just what you’re looking for. More than18,000 listed companies make theopportunity forinvestmentinAsiatruly immense.But with such Past performance is notareliableindicator of future diversity, howdoyou ensureyou aresetting off onthe returns. Thevalue of investments can go down as well as rightpath? up andyou may not get back theamountyou invested. Overseas investments aresubject to currencyfluctuations. ForNitinBajaj, portfoliomanager of FidelityAsian Values Investments in small andemerging marketscan be more PLC, it’s aboutfindingthe smaller companies that are volatilethanother overseas markets. The sharesinthe primed to turnintothe region’s winnersoftomorrow. investmenttrust arelistedonthe London StockExchange Nitin’s approach is quitesimple–helooks to invest in andtheirpriceisaffected by supply anddemand. attractively-valued, quality businesses thatare runby Theinvestmenttrust cangainadditionalexposure to the peoplehetrusts. market,known as gearing, potentiallyincreasingvolatility. This trustinvestsmoreheavily thanothersinsmaller PAST PERFORMANCE companies, whichcan carry ahigher risk because theirshare prices may be more volatile than thoseoflargercompanies. Feb13- Feb14- Feb15- Feb16- Feb17- Feb14 Feb15 Feb16 Feb17 Feb18 To find outmore, go to fidelity.co.uk/ asianvalues or speaktoyour adviser. FidelityAsian Values -4.7%22.8% -0.8% 46.6% 3.4% NetAsset Value

FidelityAsian Values -0.8% 22.8% -2.4% 53.2% 6.9% Share Price

MSCI AC Asia -9.5% 18.4% -11.8% 41.7% 19.2% ex Japan

Past performance is notareliableindicatoroffuture returns. Source:Morningstarasat28.02.2018,bid-bid,net income reinvested.©2018 Morningstar Inc.All rights reserved.The comparativeindexofthe Investment Trust is MCSI AC Asia ex Japan.

The latest annual reports and factsheets canbeobtained from our websiteatwww.fidelity.co.uk/its or by calling0800 41 41 10.The full prospectusmay also be obtained from Fidelity. Issued by Financial Administration Services Limited,authorised and regulatedbythe Financial ConductAuthority. Fidelity, FidelityInternational,the FidelityInternational logo and Fsymbolare trademarks of FIL Limited. UKM0318/21687/CSO8681/0618

Job No: 56090-103 Publication: Shares Magazine Size: 297x210 Ins Date: 05.04.18 Proof no: 1 Tel: 0207291 4700 USING THE Contents PDF VERSION? CLICK ON PAGE NUMBERS TO JUMP 05 April 2018 TO THE RELEVANT STORY

EDITOR’S VIEW 02 How to spot decent dividend 08 opportunities

BIG NEWS 06 Takeover activity could put the spark back into the technology sector

BIG NEWS 07 DF S is delivering again, but for GREAT IDEAS GREAT IDEAS how long? 11 Miton looks cheap 12 The investment trust with plenty of room to help you navigate BIG NEWS to grow choppy markets 07 Eas ter rain and Conviviality collapse GREAT IDEAS UPDATES add to retail and 13 We update on Hilton leisure sector woes 10 Food and Billington

BIG NEWS WEEK AHEAD 08 Kore Potash to 14 Finan cial results and rival Sirius Minerals ex-dividends over with ‘world class’ the coming week mining project FUNDS STORY IN NUMBERS 16 How does an 10 Di gital advertising investment fund tax threat and other survive when a star stories in numbers manager departs?

securities, derivatives or positions with spread betting organisations that they have an interest in should first clear their writing with the editor. If the editor DISCLAIMER agrees that the reporter can write about the interest, it should be disclosed to readers at the end of the story. Holdings by third parties including families, trusts, IMPORTANT self-select pension funds, self select ISAs and PEPs and nominee accounts are included in such interests. Shares publishes information and ideas which are of interest to investors. It does not provide advice in relation to investments or any other financial matters. 2. Reporters will inform the editor on any occasion that they transact shares, Comments published in Shares must not be relied upon by readers when they derivatives or spread betting positions. This will overcome situations when the make their investment decisions. Investors who require advice should consult a interests they are considering might conflict with reports by other writers in the properly qualified independent adviser. Shares, its staff and AJ Bell Media Limited magazine. This notification should be confirmed by e-mail. do not, under any circumstances, accept liability for losses suffered by readers as a result of their investment decisions. 3. Reporters are required to hold a full personal interest register. The whereabouts of this register should be revealed to the editor. Members of staff of Shares may hold shares in companies mentioned in the magazine. This could create a conflict of interests. Where such a conflict exists it 4. A reporter should not have made a transaction of shares, derivatives or spread will be disclosed. Shares adheres to a strict code of conduct for reporters, as betting positions for seven working days before the publication of an article that set out below. mentions such interest. Reporters who have an interest in a company they have written about should not transact the shares within seven working days after the 1. In keeping with the existing practice, reporters who intend to write about any on-sale date of the magazine.

4 | SHARES | 05 April 2018 Contents

MONEY MATTERS 42 The Canadian lottery 24 conundrum: $1m today or $1,000 a week for life?

LARGER COMPANIES 44 Phoenix could be the best income stock you’ve never heard of

SMALLER COMPANIES 45 Des tiny Pharma targets $1bn US market with INVESTMENT TRUSTS FEATURE antimicrobial 20 The Scottish 38 First quarter update resistant drug Investment Trust on our 2018 share takes a different portfolio INDEX approach 47 Index of companies MONEY MATTERS and funds in this issue MAIN FEATURE 40 How to use 24  Investing through past performance the generations figures wisely

UNDER THE BONNET 32 A novel way to earn income with 38 Duke Royalty

FEATURE 34 Fo ur lessons to draw from 18¼ years of precisely zero from UK stocks

WHO WE ARE BROKER RATINGS EXPLAINED: EDITOR: DEPUTY NEWS Daniel EDITOR: EDITOR: We use traffic light symbols in the magazine to illustrate Coatsworth Tom Sieber Steven Frazer broker views on stocks. @SharesMagDan @SharesMagTom @SharesMagSteve FUNDS AND REPORTER: REPORTER: CONTRIBUTORS Green means buy, Orange means hold, Red means sell. INVESTMENT TRUSTS David Stevenson Lisa-Marie Janes Emily Perryman EDITOR: @SharesMagDavid @SharesMagLisaMJ Tom Selby James Crux Holly Black The numbers refer to how many different brokers have @SharesMagJames that rating.

MANAGING DIRECTOR PRODUCTION ADVERTISING Eg: 4 2 1 means four brokers have buy ratings, Mike Boydell Head of Design Senior Sales Executive Rebecca Bodi Nick Frankland two brokers have hold ratings and one broker has a sell 020 7378 4592 rating. CONTACT US: Designer [email protected] [email protected] Darren Rapley The traffic light system gives an illustration of market views Shares magazine is published weekly every Thursday (50 times per year) by AJ Bell Media Limited, but isn’t always a fully comprehensive list of ratings as some 49 Southwark Bridge Road, London, SE1 9HH. Company Registration No: 3733852. banks/stockbrokers don’t publicly release this information. All Shares material is copyright. Repro­duction in whole or part is not permitted without written permission from the editor.

05 April 2018 | SHARES | 5 BIG NEWS Takeover activity could put the spark back into the technology sector Analysts are optimistic about a new wave of takeovers and stock market flotations

harp declines in global technology stocks Accounting software firm Sage (SGE) has come have sparked consternation among investors under stiff selling pressure, down more than 20% Son both sides of the pond, yet some analysts since the end of January. are predicting a surge in mergers and acquisition FTSE 250 cyber security company Sophos (M&A) activity through the rest of 2018. (SOPH) has also landed hard, down more US president Donald Trump’s scathing attack than 35% since late January. on Amazon over the Easter weekend wiped more Aveva (AVV), the engineering design software than $35bn off the internet retail giant’s valuation provider and the largest UK technology company early this week. outside the FTSE 100, is down nearly 9% even after Other big US-based technology companies to accounting for its recent large cash return. see their share prices fall include Facebook, Netflix, This matters for all investors because technology and Tesla. companies have grown to dominate global stock These share price declines have been mirrored markets in terms of weighting, or in other words, by the performance of many of the UK’s largest their influence on stock markets as a whole. technology companies. Numbers crunched by analysts at investment FTSE 100 software company Micro Focus platform provider AJ Bell recently show 10 of (MCRO) collapsed last month after getting into the world’s 25 biggest companies are technology integration difficulties with a large acquisition. Its businesses, including all of the top five. share price has lost a staggering 60% since the start of 2018. M&A AND IPO MARKET TO SURGE AHEAD While valuations are arguably still high in the tech sector, analysts at stockbroker Peel Hunt believe TECH SECTOR SELL-OFF that M&A activity is set to accelerate through the remainder of 2018. 1-MONTH SHARE PRICE COMPANY M&A has picked up over recent months, with MOVEMENT Aveva sealing a merger and Worldpay (WPY) being acquired by Vantiv. Tesla -21% On 3 April, Fidessa (FDSA) delayed a meeting Facebook -12% to vote on a takeover by Temenos after receiving interest from two other parties. Amazon -7% Peel Hunt believes this could be just the tip of the iceberg with capital expenditure budgets for Alphabet -6% technology projects rising and industry balance Apple -5% sheets loaded with cash. ‘We think the UK listed tech universe will Microsoft -4% provide rich pickings to play the [M&A] theme,’ Peel Hunt says. The analysts also anticipate that Netflix -3% the technology initial public offering (IPO) market Source: SharePad, data to 3 April 2018 in the UK will ‘roar back’ this year. (SF)

6 | SHARES | 05 April 2018 BIGBIG NEWSNEWS DFS is delivering again, but for how long? Trading strengthens at sofa seller yet big ticket spending remains squeezed

as the market been too pessimistic on Matthew Taylor. ‘The demand backdrop was sofa seller DFS Furniture (DFS)? Its relatively benign and DFS achieved solid Hshare price jumped last week when profit growth, in line with forecasts, while the company said recent trading had shown broadening its business base and paying improvement. generous dividends. Investors were more excited about current ‘The past year has been a much tougher ride conditions to worry about a 30% decline in with operating profit c.15% below the level half year pre-tax profit to £11.6m. In reality, achieved before the IPO.’ a decline in earnings was fully expected Anyone buying the shares today could get a by the market. 6%+ dividend yield, assuming earnings forecasts Stockbroker Numis now forecasts annual pre- are correct. tax profit to decline to £47.5m (2017: £50.1m), However, earnings growth is unlikely to be ahead of a recovery to £52.5m in 2019. consistent in the near-term given the ongoing ‘The shares performed steadily enough in fragile state of the retail market and consumer the two years following the IPO (initial public spending pressures. That suggests that the offering) in March 2015,’ says Numis analyst share price could also remain volatile. (JC) Easter rain and Conviviality collapse add to retail and leisure sector woes Expect to see further bad news when the retail and leisure sectors next update on trading A WASHOUT Easter and the nice. Therefore this year’s bad At the time of writing cider collapse of a major industry weather doesn’t bode well for maker C&C (CCR) was in talks supplier look set to cause further the likes of pub chains such as to buy the distribution arm headaches to the already- Greene King (GNK) and Mitchell of Conviviality and several bruised retail and leisure sectors. & Butlers (MAB), as well as unnamed parties were in The long Easter weekend theme park operator Merlin discussions about buying has traditionally been a strong Entertainments (MERL). Bargain Booze, the retail arm of sales driver for consumer-facing Also disrupting the sector is Conviviality. companies. However, the past the collapse of drinks distributor Reports suggested many weekend’s terrible weather may Conviviality (CVR:AIM). Its Bargain Booze stores were have deterred people from going troubles may have caused experiencing supply problems, out to eat, drink or enjoy leisure temporary disruption to supplies which could have encouraged activities. for some of its customers, shoppers to go to rival alcohol Easter can often result in including budget pub chain sellers such as convenience busy pub gardens and packed JD Wetherspoon (JDW) and store chain McColl’s Retail theme parks if the weather is Revolution Bars (RBG:AIM). (MCLS). (LMJ)

05 April 2018 | SHARES | 7 BIG NEWS Kore Potash to rival Sirius Minerals with ‘world class’ mining project Fresh on the UK stock market, Kore will soon have to raise a lot of money to build a potash project ans of British mining stock Sirius Minerals (SXX) may be interested in another potash Fcompany called Kore Potash (KP2:AIM) which has just listed on the UK stock market. Analysts reckon it has a world class project which is likely to have some of the lowest operating costs in the industry, implying scope to make healthy profit margins if potash prices hold up. Later this year Kore will have to raise a very large amount of money. Current estimates suggest its Kola project in the Republic of Congo will cost $1.8bn to build. Chief executive Sean Bennett believes one third of the money will have to be raised from investors, adding up to $600m (£427m). That’s more than He hopes to start construction next year and four and a half times its current market cap begin production in 2022, meaning it is just (£90.2m). The remaining $1.2bn will come from behind Sirius which is already building and eyeing debt finance. a 2021 start-up for its potash project in Yorkshire. ‘Our big investors know we have to raise a lot of Kore has an advantageous position thanks to money once our definitive feasibility study is out its ore body being relatively shallow compared at the end of the second quarter or in the third to many potash mines at 190m to 340m deep. quarter this year,’ explains Bennett. ‘They wouldn’t In comparison, Sirius is sinking a shaft to a depth have backed us if they weren’t willing to help with of 1,500m. the costs of the mine build.’ Kore will produce MOP which is the most Kore (when known as Elemental Minerals) common potassium source used in agriculture, received a $123m takeover offer from Asian accounting for approximately 95% of all potash investor Dingyi Group in 2013 but the deal fell fertilisers used worldwide. Sirius plans to produce through for technical reasons linked to red tape polyhalite which has an unproven market. around a stock market listing in Hong Kong. Kore is at a disadvantage to Sirius from a Dingyi now owns 8.82% of Kore and is the financing perspective. The latter has already fourth largest shareholder. Other big investors raised its mine money and arguably operates include SGRF (Oman’s state general reserve fund) in a lower risk geography from an investment at 19.06%, Chile lithium producer SQM at 17.55%, perspective. and Harlequin Investments at 12.55%. The pair could soon be joined on the London Bennett says Kore will look to switch listings stock market by another potash miner, Danakali. from AIM to London’s Main Market when it raises It has a joint venture in Eritrea on the Colluli money for the mine build, similar to the route project which could start production in 2020 via followed by Sirius Minerals. open pit mining. (DC)

8 | SHARES | 05 April 2018 F&C Investment Trust Celebrating our first 150 years

Pioneering 150 years ago, pioneering today. Whatever your investment goals contact us to help you achieve them. As with all investments, the value can go down as well as up and you may not get back your original investment.

To find out more:

Call F&C Investments 0800 915 6016 quoting 18MFC/1 (weekdays, 8.30am – 5.30pm)  Contact your usual financial adviser

Visit fcit150.co.uk, or search for ‘Foreign & Colonial’.

Please read our Key Features, Key Information Documents and Pre-sales cost disclosures before you invest. These can be found at fandc.co.uk/literature.

F&C Investment Trust – the world’s oldest collective investment fund.

© 2018 BMO Global Asset Management. All rights reserved. Issued and approved by BMO Global Asset Management, a trading name of F&C Management Limited, which is authorised and regulated by the Financial Conduct Authority. Calls may be recorded. CM16203 (03/18) UK.

CM16203 FCIT 150 Advertising Promotions Shares Magazine 297x210-V2.indd 1 19/03/2018 17:00:00 STORY IN NUMBERS

Could digital advertising IS IT WORTH face double FOLLOWING taxation? WIDDOWSON THE EUROPEAN UNION 3% has ON FRESH has outlined plans to impose a 3% tax on ODYSSEY? digital advertising revenue, fees from subscribers to online ODYSSEAN CAPITAL IS services like Spotify and income from seeking to raise up to selling personal data to third parties, £100m for the Odyssean based on users’ locations. Investment Trust through The proposals are aimed at getting the an IPO priced at £1 a likes of Google and Facebook to pay their fair share. Debut dealings are share of taxation. slated for 1 May. The new The move has been criticised by the chief executive of German fund will be managed by media firm Bertelsmann Thomas Rabe. He fears this would mean effective double taxation for firms such as his which already pay Stuart Widdowson, who substantial taxes in the EU. amassed a following with his excellent stewardship of Strategic Equity Dunkerton waves Capital (SEC), and Edward Wielechowski. The pair goodbye to Superdry plans to put money to work in smaller companies trading below intrinsic value and ‘where this value can be increased through 202% strategic, operational, INVESTORS WHO BOUGHT into branded management and/or clothing and footwear business financial initiatives.’ Under Superdry (SGP) on flotation Widdowson’s tenure (as SuperGroup) in March 2010 between 30 June 2009 and have tripled their money. The 31 January 2017, Strategic shares have delivered a 202% Equity Capital delivered a total return. Julian Dunkerton, net asset value (NAV) total one of the founders of the return of 377% and a share Superdry brand, is leaving the price total return of 508%. company in order to ‘devote more time to his other business and charitable interests’. The bearded entrepreneur, 53, co-founded £100M Superdry with designer James Holder in 2003. Originally the brand was sold in Cult Clothing, a retail business founded by Julian and a former business partner in Cheltenham in 1985. The first Superdry store was launched in 2004 and the business grew quickly from there.

10 | SHARES | 05 March 2018 GREAT IDEAS Miton looks cheap with plenty of room to grow A plucky little asset manager which is a great value and income play

hile the heavyweights of asset management XXXXMITON   BUY BUY such as Standard Life (xxx)(MGR:AIM) xxxp 41.75p W Stop loss: 33pxxp Aberdeen (SLA) seem to be haemorrhaging money through Market value: xxx£74m multi-billion pound outflows from their products, a much smaller peer is pulling in the punters. We give you Miton (MGR:AIM), a self-proclaimed ‘specialist’ asset manager whose 2017 results showed £494m of inflows into its products during the year. The funds that Miton offer very far from tracker funds (0% savvy stock selection, investing can be broadly described as active share would be a tracker). is always a risk. single strategy and multi-asset, Miton also invests primarily with a penchant for seeking THE NUMBERS in equities; while it will allocate out value plays. The latter style For 2017, Miton increase its money to bonds and other assets is illustrated explicitly with its pre-tax profit by 33% to £6.8m within its multi-asset range it does UK Value Opportunities Fund and upped its dividend by 40% not have any pure bond funds (GB00B8KV0M06) and both to 1.4p per share. which arguably heightens the risk. the US Smaller Companies The company is debt free with It may also lose star fund Fund (GB00BF54H991) and a £24m net cash position and no managers, which happened UK Smaller Companies Fund pension deficit. when Georgina Hamilton and (GB00B818N094). Stuart Duncan, analyst at George Godber left in 2016. CEO David Barron tells Shares broker Peel Hunt, says ‘there The departure of the overseers that one reason his firm has is a clear value opportunity now of the UK Value Opportunities done well is due to a desire for with Miton’. Fund resulted in a 30% share ‘genuine active management’. Using his forecasts this seems price fall at the time for the ‘It’s harder to buy the market evident. Miton is trading on parent group. (DS) and make money’ he says, in a bargain 9.5 times 2019’s reference to investors relying on forecast earnings while paying a BROKER SAYS: 001 index trackers to make returns. prospective dividend yield of 4.8%. MITON GROUP He adds that this has been FTSE ALL SHARE heightened by central banks across THE RISKS 46 the world moving to normalise 2018 has not been a great year 44 monetary policy, i.e. rein in for the markets, with a global 42 quantitative easing programmes sell-off occurring in February. 40 and raise interest rates. While active management 38 Miton’s funds have around 90% should mitigate some of the 36 34 Source: Thomson Reuters Datastream active share meaning they are market downturns through 2017 2018

05 April 2017 | SHARES | 11 GREAT IDEAS The investment trust to help you navigate choppy markets Highly-diversified portfolio and considerable expertise are highly valuable in current market conditions

n times of market strife it can pay to use the services of a FOREIGN & COLONIAL highly experienced investment INVESTMENT TRUST Iprofessional. Having been  BUY through 150 years of market (FRCL) 613.5p ups and down, investment Stop loss: 490p trust Foreign & Colonial (FRCL) should certainly know how to navigate current choppy market conditions. It targets three main types of dividends quarterly. It has a stellar track record investment: In common with other and offers truly diversified global • Shares in well-established investment trusts, Foreign & exposure with around 95% of companies on major stock Colonial can and does borrow to the portfolio made up of markets enhance returns. The maximum overseas investments. The • Rising stars in developing gearing rate is 20% and it stood at investment trust has achieved economies 7% at the end of February 2018. 10.3% annualised return over • Less-liquid investments Performance has regularly the past decade. including private equity come in ahead of its benchmark, Its portfolio includes exposure the FTSE All-World total return to private equity which has a FINDING THE RIGHT BLEND index, with double-digit returns track record of beating listed Foreign & Colonial is managed by achieved in four of the last five equity over the long term. Its Paul Niven who became only the calendar years. longevity should also help it third manager to take the helm The shares have traded in a to place current challenges, over the past four decades in 2014. 5.9% to 9.2% average discount like the threat of a trade war In truth Foreign & Colonial is a to net asset value range over the between the US and China, into multi-manager fund; its US fund last one, three, five and 10 years, perspective. is managed by the likes of T Rowe according to research group The fund invests more than Price, for example, and the private Edison. The current discount to £3.5bn in several different equity component by Pantheon NAV stands at 3%. (TS)

strategies either internally and HarbourVest. Niven helps FOREIGN & COLONIAL FTSE ALL SHARE at investment group F&C to find the right blend between 680 Management or through third different strategies. 660 parties. It has around 500 Established in 1868 the trust, 640 different underlying holdings which wants to change its name 620 600 either directly or indirectly. This to F&C Investment Trust, has 580 diversity should help it smooth increased its dividend every year 560 out the ups and downs of the since 1971. It currently offers 540 520 Source: Thomson Reuters Datastream market. an annual yield of 2% and pays 2017 2018

12 | SHARES | 05 April 2017 GREAT IDEAS UPDATES

HILTON FOOD BILLINGTON (HFG) 800p (BILN:AIM) 260.55p

Gain to date: 12% Gain to date: 3.4% Original entry point: Original entry point: Buy at 714.5p, 20 April 2017 Buy at 252.2p, 24 August 2017 OUR BULLISH CALL on meat packing specialist GIVEN THE VOLATILE performance of the wider Hilton Food (HFG) is 12% in the money. We remain market, the fact our positive call on structural positive on the investment case given its visible steel specialist Billington (BILN:AIM) is in positive growth pipeline, progressive shareholder reward territory at all is some achievement. and an ungeared balance sheet providing firepower Full year results (27 Mar) revealed a 16% to fund new expansion opportunities. increase in pre-tax profit to £4.4m in 2017 and a Cash-generative Hilton supplies the likes of maintained margin performance. The company Tesco (TSCO), Coop Danmark, Woolworths also has a strong forward order book and boosted and Ahold from state-of-the-art plants that use its dividend by 15% to 11.5p. automation and advanced robotics. Crucially the company was largely unaffected by Full year results (28 Mar) were better than the fall-out from the collapse of Carillion with a hit expected with adjusted pre-tax profit up 12.7% to of just £106,000. £37.4m on volumes up 10.4% to 303,811 tonnes The cost of structural steel sections, the main and the total dividend raised 11.1% to 19p. raw material for the business, has risen 40% in Encouragingly, the £81m acquisition of Seachill has the last two years but management are hopeful provided a low risk entry into the growing fish protein prices will now begin to stabilise. The completion of category and strengthened Hilton’s ties with Tesco, improvement works at its Shafton site, acquired in while exciting investments in Australia, New Zealand 2016, should help it control costs. and Central Europe are all progressing to plan. Profitability has been somewhat pressured Stockbroker Numis forecasts pre-tax profit of as contract decisions are delayed thanks to the £43.3m in 2018 and £45.6m in 2019. uncertainty created by Brexit.

HILTON FOOD GROUP A small number of projects were completed FTSE ALL SHARE 900 in mainland Europe in 2017 and the company is 850 pursuing further opportunities outside its core UK market. 800

750 BILLINGTON HOLDINGS FTSE ALL SHARE 700 300 650 270 600 Source: Thomson Reuters Datastream 2017 2018 240 SHARES SAYS: 

We’re fans of Hilton Food, a relatively defensive pick 210 Source: Thomson Reuters Datastream with tasty growth potential and a cash generative 2017 2018 business model. Keep buying. (JC) SHARES SAYS:  BROKER SAYS: 024 Encouraging results and while Billington faces macro-economic headwinds these are reflected in a cheap forward price-to-earnings ratio of 8.9 times and dividend yield of 4.5%. Keep buying. (TS)

BROKER SAYS: 001

05 April 2018 | SHARES | 13 WEEK AHEAD

MONDAY 9 APRIL FINALS Frenkel Topping FEN Keywords Studios KWS ECONOMICS UK Halifax HPI BRC Retail Sales Monitor TUESDAY 10 APRIL FINALS Card Factory CARD MP Evans MPE INTERIMS Nanoco NANO WEDNESDAY 11 APRIL FINALS Ergomed ERGO VIDEO GAME SERVICES provider Tesco TSCO Keywords Studios (KWS:AIM) INTERIMS reports its 2017 full year results DID STORM EMMA and the ASOS ASC on Monday 9 April. Beast from the east give people The company has already another reason to shun the shops stated its revenue and profits in March? Investors can find will be comfortably ahead of out whether the cold weather market expectations but as other affected UK retail sales when the highly rated growth stocks have British Retail Consortium (BRC) seen, the slightest wrinkle in the reveals the latest data on 9 April. results or outlook could have In February, retail sales rose a big negative impact on the by 1.6%. share price. Keywords made 11 acquisitions EX-DIVIDEND in 2017, taking its total since BBA Aviation BBA $0.1 IPO up to 27. It has further cash Begbies Traynor BEG 0.7p available for more acquisitions. Costain COST 9.25p Equiniti EQN 2.7p Esure ESUR 9.4p TRADING STATEMENTS Gresham Technologies GHT 0.5p PageGroup PAGE International SMALL CAP OIL and gas firm Vedanta Resources VED Personal Finance IPF 7.8p Serica Energy (SQZ:AIM) is set ECONOMICS ITV ITV 5.28p to announce its 2017 results on UK Johnson Service JSG 1.9p 10 April. Manufacturing Production Merlin Entertainments MERL 5p The focus is likely to be less Construction Output Octopus Titan VCT OTV2 3p on the numbers themselves and Industrial Production Paddy Power Betfair PPB 135p more on the performance of the THURSDAY 12 APRIL PPHE Hotel PPH 13p collection of fields it is acquiring FINALS Reckitt Benckiser RB. 97.7p from BP (BP.). Destiny Pharma DEST Rentokil RTO 2.74p Look for an update that Saga SAGA Smurfit Kappa SKG €0.65 the £300m transaction is on INTERIMS STV STVG 12p schedule to complete in the third WH Smith SMWH Savills SVS 15.1p quarter as planned. TRADING STATEMENTS Savills SVS 10.45p Once it has gone through, Dunelm DNLM Unite UTG 15.4p Serica’s production is projected Man Group EMG Vesuvius VSVS 12.5p to increase seven-fold to 21,000 Hays HAS barrels of oil equivalent per day, PZ Cussons PZC Click here for complete diary 85% of which will be natural gas. Quiz QUIZ www.sharesmagazine.co.uk/market-diary

14 | SHARES | 05 April 2018 Janus Henderson financial goals. your long-term exists tohelp you achieve Henderson Investors includes HGIGroup Limited, HendersonGlobal Investors (BrandManagement) SarlandJanusInternational HoldingLLC. Conduct Authority to provide investment products and services. Telephone calls may be recorded and monitored. © 2017, Janus Henderson Investors. The name Janus incorporated andregistered inEngland andWales withregistered officeat201Bishopsgate, London EC2M3AE) are authorisedand regulated bytheFinancial AlphaGen CapitalLimited (reg. no. 962757), Henderson EquityPartners Limited(reg. no. 2606646), Gartmore Investment Limited(reg. no. 1508030), (each Global Investors Limited(reg. no. 906355), HendersonInvestment Funds Limited(reg. no. 2678531), HendersonInvestment ManagementLimited(reg. no. 1795354), Issued intheUKby JanusHenderson Investors. JanusHendersonInvestors isthenameunder whichJanusCapitalInternationalLimited(reg no. 3594615), Henderson For promotional purposes

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H034018/0218

FUNDS How does an investment fund survive when a star manager departs? We look at the impact on asset flows and how replacement managers have to fight back

oyalty means many people follow their favourite fund Lmanager when they move to a different employer, but investors F U N may not realise the damaging effect this can have on the fund they leave behind. Funds sometimes become so

synonymous with the managers who run them that if he or she D departs it can cause an exodus of investors too. High profile managers such

as Neil Woodford and Richard

U N Buxton gain such a loyal following F that investors will often follow them to a new fund house. But experts argue this is not always the best decision. The success of a fund is rarely because Yet funds frequently experience problems for the new manager of a single person; often a vast significant outflows when a star as they try and manage a team of analysts and researchers manager moves jobs as nervous shrinking fund, which forces contribute to its running and, in investors pull their money out. them to constantly liquidate their the event of a manger resigning, It’s hardly a vote of confidence holdings. These outflows can last there is generally a long handover for the new incumbent, and it for months or even years, creating period to a new manager to also makes it harder for them to a significant headwind for the ensure a smooth transition. outperform as they try to manage new manager.’ a dwindling pool of assets. In the RISK OF FUND OUTFLOWS end, what inevitably determines EXAMPLES OF STAR FUND Brian Dennehy, director at Fund whether a fund can survive after a MANAGER DEPARTURES Expert, says: ‘I have never known ‘star’ departs is its performance. We looked at five funds which a good fund become a bad fund Ryan Hughes, head of active have experienced high-profile simply due to a manager change. portfolios at AJ Bell, says: ‘It’s manager departures in recent There are clear processes in place important to tread carefully when years and found that just one is which can be continued even a high-profile manager stops now seeing positive net inflows after a manager leaves – we running a fund. from investors and has achieved see the lead manager merely as ‘The rush for the exit door by greater returns than its sector a caretaker.’ investors can cause all kinds of average under new leadership.

16 | SHARES | 05 April 2018 FUNDS

When Neil Woodford (below) But Dennehy at Fund Expert left the £13.8bn Invesco points out that the issue could Perpetual High Income be the fund’s strategy rather (GB00BJ04HQ93) fund in 2014 Taking over than its manager. ‘Just because a to start up his own firm investors someone else’s fund is headed by a so-called star pulled £2.9bn out of the fund manager it does not necessarily in the 12 months after his fund is not as easy follow that the fund will also departure. as starting with a outperform. ‘Woodford is a current example blank“ sheet of paper of this situation – his equity – Andrew Jackson, income fund is currently in the bottom quartile of its sector, Miton down 12.9% over the past year compared to an average positive return of 0.3% among its peers,’ he explains. (GB00B5L33N61) fund in 2013 to move to Old Mutual Global BOUNCING BACK Investors where he is now chief Some £587m was pulled executive. The fund lost £2.2bn out of the £868m Miton of its £3.6bn worth of assets in UK Value Opportunities Since taking the helm new the year after his ”move and is (GB00B8QW1M42) fund when manager Mark Barnett has now down to £899m. co-managers George Godber delivered a return of 19.4% Replacement manager Philip and Georgina Hamilton (below) compared to an average of 24.5% Matthews has delivered a return moved to Polar Capital. in the UK All Companies sector. of 32.3% since taking over Today the fund stands at £9.2bn. compared to an average of 44.9% Richard Buxton left the from the UK All Companies sector Schroder UK Alpha Plus over the same period.

Size when Departed star Fund departure 6-month 12-month manager announced outflow outflow Invesco Neil Woodford Perpetual £13.8bn £1.8bn £2.9bn High Income

Richard Buxton Schroder UK £3.6bn £1.8bn £2.2bn Alpha Plus The replacement manager Andrew Jackson has seen George outflows stop over the past Godber, Miton UK year and the fund has started Georgina Value Opps £868m £520m £587m Hamilton growing again and is now £393m in size. He seems to Schroder have restored investors’ faith Paul Marriage UK Dynamic £620m £206m N/A after delivering a return of Smaller Cos 39.8% since taking over in JO Hambro 2016 compared to a UK All John Wood UK Opps £1.7bn £524m N/A Companies sector average of 22.8%.

05 April 2018 | SHARES | 17 FUNDS

Jackson at Miton says: ‘Taking Dixons Carphone (DC.) and over someone else’s fund is not a housebuilder, bringing in as easy as starting with a blank industrial companies such as sheet of paper. It’s like moving metering and control business into a house where you need Spectris (SXS). to do some redecorating – you But revamping a portfolio is go in and make some initial hard when you’re experiencing a changes and other things you mass of investor redemptions. I have never get around to over time.’ ‘Managing an expanding fund known a good fund He gave himself three months is definitely easier and more to get the portfolio in shape, fun that managing a contracting become a bad fund changing around a third of the one, but it does force you to simply due to a holdings. constantly re-evaluate the The manager sold UK portfolio and how it is going to manager“ change. We consumer stocks such as make money,’ Jackson explains. see the lead manager merely as a caretaker RECENT EXAMPLES OF STAR – Brian Dennehy, MANAGERS LEAVING A FUND Fund Expert

Philip Rodrigs: The small cap fund manager left River and Mercantile earlier this year amid claims of misconduct. He was highly respected in the market as a small cap stock picker, best known for running the River and Mercantile UK Equity Smaller Companies Fund (GB00B1DSZS09). ” His departure prompted several investment platforms to remove this fund from their top picks list, including AJ Bell Youinvest and Hargreaves Lansdown. FINAL POINTS TO CONSIDER Financial data provider Morningstar downgraded the fund to a Investors should make sure ‘bronze’ rating; having previously awarded it a ‘silver’ rating based they understand the structure on several factors including Rodrigs’ experience and qualitative at a fund before they invest in input into the investment process. it – including who makes the ‘The manager change has created some uncertainty, but we decisions and whether it is run believe that the fund still has investment merit with (new fund on a team-basis or by a key manager) Dan Hanbury at the helm,’ says Morningstar. individual. Understanding the investment Talib Sheikh: A well-known name in the multi-asset funds process will make it easier to industry, Sheikh quit JPMorgan in February this make an informed decision year to head up Jupiter’s multi-asset business. about whether or not to stick He had been due to become one of the lead with the fund in the event that managers on the JPMorgan Multi-Asset Trust there is a manager change. (MATE) which floated on the stock market So-called ‘key man risk’ may in March. be more prevalent at smaller Sheikh co-ran several funds at JPMorgan investment firms where there is including its €24bn flagship global income fund. (DC) less resource and teams may be smaller. (HB)

18 | SHARES | 05 April 2018 RETIREMENT Produced by money s how 13 June 2018 12:30 - 17:30

AT AMERICA ARE YOU RETIREMENT SQUARE, READY? LONDON EC3N 2LB Come to the Retirement Money Show to find out more about retirement planning. All attendees receive a goody bag and will be entered into free prize draws.

It’s no fun getting old when you’re worried about running out of money, so do you have a financial plan for the possibility of living to be 100? Did you know that the current average retirement age is 64 years old and the average life expectancy is now 81 years old? To put this into perspective you might have to plan your retirement pot to last 17 years.

Come along to the Retirement Money Show, the London-based afternoon event run by Shares and AJ Bell Media which takes place on 13 June 2018 and features expert pension and financial speakers who will help investors better understand pensions and savings.

Register for free today and receive your Retirement Money Show goody bag when you arrive!

Discover more about the most important retirement issues and how best to manage your hard-earned money. The show is suitable for people still in employment and wanting to better understand financial planning, as well as those already in retirement looking to get the most from their pension and other assets.

Our speakers will be covering topics that are relevant to both those already in retirement and those who are still in work.

Knowing how to manage your pension pot – either in preparation for later life or during retirement – is one of the big challenges facing millions of people today and a central theme to the free-to-attend Retirement Money Show. It is one of a number of topics that we will discuss during the afternoon, so come along to the event armed with questions as there will be a wide range of people happy to talk to you.

You will have the opportunity to ask questions to most of the REGISTER speakers and to interact with specialists in savings, income, funds, ISAs and pensions/SIPPs on the exhibition stands. NOW

To find out more and register www.retirementmoneyshow.com [email protected] 020 7378 4406

Sponsors and featured companies In Partnership with INVESTMENT TRUSTS The Scottish Investment Trust takes a different approach Contrarian investor Alasdair McKinnon seeks to avoid the ‘madness of crowds’

rading at an 8.5% discount to net asset value, The TScottish Investment Trust (SCIN) may interest investors who want an investment trust that doesn’t chase the latest hot fads or so-called ‘story stocks’. Instead, this product is more interested in finding real value in the market. Independently managed, the trust, which targets both income growth and above-market capital returns, has increased its regular dividend for 34 consecutive years. The Scottish has delivered just under 10% annualised total return over the last three uncomfortable and you have the globe for undervalued, years. Ongoing charges are a to be patient as the investment unfashionable companies that relatively modest 0.49% a year case unfolds. are ripe for improvement. and the trust has also announced The Scottish’s fund manager He runs a portfolio of global a step-change in its dividend Alasdair McKinnon and his team best ideas with 56 names held in policy, increasing the regular are firmly in the contrarian the trust at last count; the largest distribution in preference camp. They employ behavioural sector exposure is to financials, to specials and moving to finance techniques to exploit where holdings include banks in quarterly dividends. It has a 2.5% investors’ tendency to ‘follow the US, Europe and Japan. historic yield. the crowd’. By focusing on stocks Ever willing to go against that are very unloved, those with the grain, McKinnon’s picks fall HIGH CONVICTION, GLOBAL operational improvements that within three categories. ‘Ugly CONTRARIAN have been overlooked, and more ducklings’: unloved shares most Contrarian investors look for popular stocks that can continue investors shun, among them companies whose potential for to do better, the managers build large caps such as Tesco (TSCO). share price growth or recovery in a margin of safety. ‘Change is afoot’ stocks that has been overlooked by the have endured prolonged poor market. This style requires steely GOING AGAINST THE GRAIN operating performance but have nerves; humans have evolved Patient portfolio builder recently demonstrated improving to like to belong to a group or McKinnon seeks to avoid the prospects; examples include feel a part of something bigger, ‘madness of crowds’, investing Dutch bank ING and Brazil-based so taking a contrarian stance is away from the herd and scouring beer brewing behemoth Ambev.

20 | SHARES | 05 April 2018 In Partnership with INVESTMENT TRUSTS

Last but not least are McKinnon’s ‘more to come’ ideas, sound businesses boasting decent prospects yet where scope for further improvement has yet to be fully recognised, such as Rentokil Initial (RTO).

BACKING BRICKS & MORTAR McKinnon’s unwaveringly contrarian ethos has lead him away from the ‘second internet bubble’ – you won’t find a ‘FANG’ name or a cryptocurrency here – and into areas such as oil companies, banks and retailers. Meeting with Shares recently, McKinnon enthused: ‘We quite like US retail and we’ve got some A positive contributor to the McKinnon believes the Macy’s, GAP and a relatively new trust’s 2018 performance, Macy’s UK retail sector is interesting holding in Target. And we’ve also is the largest fashion retailer because of a likely increase in got some UK retail in Marks & and department store chain in spending power as inflation falls Spencer and Tesco.’ the US, operating under three and minimum wage increases He adds: ‘Everyone thinks the banners: Macy’s, Bloomingdale’s come through. internet is killing US department and luxury beauty products This is one his bull points for stores and malls, but actually, retailer Bluemercury. Marks & Spencer, ‘in essence, a what’s killing US department ‘The company has seen play on the UK middle class which stores has been the rise of off- declining store traffic as has been squeezed, but that is price retail,’ referring to the likes customers have been tempted just starting to turn the corner.’ of Ross Stores and TK MAXX away by discount and online Fresh from a one-on-one across the pond. retail,’ says McKinnon, ‘and it fits sit-down with M&S chairman ‘We think people have become into our ugly duckling category.’ and turnaround expert Archie infatuated with the internet Under a credible management Norman, McKinnon concedes and its wonders. The internet team, ‘the company is working to ‘they are definitely over-spaced, retailers are valued as if they are address its challenges’. but they know that and they are going to dominate the world and Tellingly, the canny stock picker closing stores. everything they do is seen as adds that ‘the balance sheet ‘They just need the top line to a good, even when it is slightly is underpinned by a portfolio improve and they are making lots eccentric, like buying a physical of real estate assets with an of efforts to make that happen. retailer like Whole Foods Market estimated total real estate value We think they’ve got a good or a door bell manufacturer. of $12.5-$13bn. chance of turning it round.’ (JC) ‘People have written off the ‘The value of these assets physical retailers, whereas what’s arguably does not appear to be 000'S THE SCOTTISH INVESTMENT TRUST really hurt them has been the reflected in Macy’s valuation, due 30 FTSE ALL SHARE (TOTAL RETURN) economy. There hasn’t been largely to concerns about the 25 money in people’s pockets, but outlook for traditional retailers,’ 20 Trump’s tax bill has put money but ‘Macy’s is a leading brand 15 in people’s pockets and they’ve in the US, is cash-generative 10 got more money to spend in and pays a covered dividend of Rebased to first 5 Source: Thomson Reuters Datastream the shops,’ he says. over 7%.’ 2009 2010 2011 2012 2013 2014 2015 2016 2017

05 April 2018 | SHARES | 21 At Orbis, we don’t follow the crowd. We follow our convictions. And dig deep into a company’s fundamentals to find value others miss. Typically, this leads us to make unfashionable choices. Our stock selection often looks different to that of other Funds. But then, over time, so does our performance. Ask your financial adviser for Follow details or visit Orbis.com from the front

Orbis Investments (U.K.) Limited is authorised and regulated by the Financial Conduct Authority As with all investing, your capital is at risk. Past performance is not a reliable indicator of future results.

7659_ORBIS_MoneyWeek_DPS_FFTF_9thJune.indd 3 13/03/2018 11:21 At Orbis, we don’t follow the crowd. We follow our convictions. And dig deep into a company’s fundamentals to find value others miss. Typically, this leads us to make unfashionable choices. Our stock selection often looks different to that of other Funds. But then, over time, so does our performance. Ask your financial adviser for Follow details or visit Orbis.com from the front

Orbis Investments (U.K.) Limited is authorised and regulated by the Financial Conduct Authority As with all investing, your capital is at risk. Past performance is not a reliable indicator of future results.

7659_ORBIS_MoneyWeek_DPS_FFTF_9thJune.indd 3 13/03/2018 11:21 INVESTING THROUGH THE GENERATIONS THE BEST WAYS FOR PEOPLE OF DIFFERENT AGES TO BUILD WEALTH

he start of a new tax year is a great time to review your A WALK THROUGH investments and ensure THE GENERATIONS T you’re building up money in the most efficient way possible. BIRTHS BIRTHS GENERATION NAME Thanks to the wide range START END of tax wrappers available, it’s possible for every generation The Silent Generation 1925 1945 to shelter their hard-earned savings from the taxman – and Baby Boomer 1946 1964 benefit from some generous Government allowances. Generation X 1965 1979 This easy-to-read article will Xennials 1975 1985 help you to determine which investment strategy will help The Millennials 1980 1994 you to reach your financial goals. Simply skip to the relevant iGen 1995 2012 section that matches your age and/or that of your children or Gen Alpha 2013 2025 parents if you want to invest on their behalf or give them some Sources include: Career Planner, Pew Research. Harvard, US Census Bureau guidance. growth. Your child can’t access their money until GEN ALPHA age 18, which means there is plenty of time to ride INVESTING THROUGH THE (APPROX. AGE 1-5) out any market volatility. If you open a Junior ISA at birth and invest £355 a If you month (£4,260 a year), the portfolio would be worth open a £112,035 by the time the child reaches 18, assuming an annual growth rate of 4%. Even investing £50 a Junior ISA month is worth it, as this would produce a pot worth “at birth £15,780 at that level of growth. Another way of investing for your child’s future GENERATIONS and invest is through a Junior SIPP (self-invested personal THE BEST WAYS FOR PEOPLE OF DIFFERENT AGES TO BUILD WEALTH £355 a pension), which they can access after age 55 under current rules. IT’S NEVER TOO EARLY TO month You can pay in up to £2,880 into a Junior SIPP START PLANNING FOR YOUR (£4,260 a each tax year and the Government will add tax CHILDREN’S FUTURE. THERE year), the relief of 20% to make this up to £3,600. ARE SPECIFIC TAX WRAPPERS Because the investment time horizon is so AIMED AT CHILDREN WHICH portfolio long, you may want to consider investing in MAKE IT POSSIBLE TO BUILD would be higher-risk assets such as shares in smaller UP A DECENT SIZED NEST EGG companies or an emerging market fund WITHOUT PAYING ANY TAX. worth containing shares in companies from such £112,035 countries as Brazil, India and You can open a Junior ISA as by the time South Korea. These types of soon as your child is born and assets could potentially BEST pay in up to £4,260 each tax year the child generate higher returns CHILDRENS under the 2018/19 allowance. reaches 18 than lower-risk assets. ‘This is tax efficient as the pot SAVINGS will grow tax-free and can then RATES be used for a variety of goals including university fees or a THERE ARE house deposit,’ says Anna Sofat, SOME DECENT RATES managing director at financial IF YOU WANT TO KEEP YOUR advice firm Addidi Wealth. CHILD’S SAVINGS IN CASH DIFFERENT TYPES OF JUNIOR ISAS REGULAR SAVINGS RATE There are cash Junior ISAs and ” Halifax (1 year) 4.50% stocks and shares Junior ISAs. A stocks and shares Junior ISA Saffron 4.00% enables you to invest in the stock market and benefit from market TOP EASY ACCESS RATE

Santander 3.00% Nationwide 2.50% (up to £50,000)

CASH JUNIOR ISA RATE

Coventry Building Society 3.50%

Source: Moneysavingexpert, 28 March 2018

05 April 2018 | SHARES | 25 TAKING THE PASSIVE ROUTE IGEN A tracker fund or exchange-traded fund could be (APPROX. AGE 6-23) one way to start investing for the iGen generation, acting as a core investment which is another way Once your of saying it is one of the backbones of a portfolio. child A product like Fidelity Index World (GB00BJS8SJ34), which tracks the MSCI World turns 16 Index, would provide exposure to the biggest the“ Junior ISA and best known companies in the world. This broad-based market exposure would act as the becomes their core, so you can then think about adding more property, but opportunistic holdings alongside it in the future. As your child gets older, reducing their Junior CHILDREN IN THE IGEN they can’t ISA’s equity exposure and moving towards cash GENERATION STILL HAVE A withdraw could be a wise move if they want to use the LONG INVESTMENT TIME money until money for something specific. HORIZON, WHICH MEANS Switching to cash in the period close to the point EQUITIES SHOULD TYPICALLY age 18. at which they need to access the money effectively BE THE FOCUS OF ANY At this locks in any gains and eliminates the risk of the INVESTMENTS. portfolio losing value should there be a period of point, there stock market weakness. ‘Equities have the potential to is nothing However, you would have to consider the impact deliver the strongest returns of inflation on any cash savings eating into the real over a long period and the time stopping your value of the money. And they would also lose out allows the impact of short term child blowing on any market gains in the period in which the volatility to be less relevant,’ the lot money is held in cash. explains Ryan Hughes, head of Once your child turns 16 the Junior ISA becomes active portfolios at AJ Bell. their property, but they can’t withdraw money until ‘By having a long time period, age 18. At this point, there is nothing stopping your it also makes it viable to save on child blowing the lot. a regular basis, perhaps through ‘Putting an investment into trust gives much a monthly savings approach, more flexibility and control to the parent/ which can be very effective even grandparent as they are able to control when the if you can only afford to save a child receives the money,’ says Hughes. ‘This also small amount each month.’ enables them to give money in phases which could be helpful for funding university fees, a deposit for ” a house or maybe a gap year.’ FIDELITY INDEX WORLD: KEY FACTS Tracks the MSCI World index which aims to represent c85% of the global developed equity market The charges are very low at 0.13% You get a slight overweight in large caps versus small and mid-caps The accumulation version of the fund has achieved 11.6% annualised return over 5 years

26 | SHARES | 05 April 2018 MILLENNIALS withdraw cash or assets from a Lifetime ISA if you withdraw money before aged 60 with the exception (APPROX. AGE 24-38) of buying your first home or if you are terminally ill. Some popular funds among Lifetime ISA investors You can invest are Fundsmith Equity (GB00B41YBW71), Scottish up to Mortgage Investment Trust (SMT) and Vanguard Lifestrategy 100% Equity (GB00B41XG308). £4,000 Even if buying a house is your priority, it’s a good “a year and idea to think long-term as well. ‘Millennials should ideally also be focusing on benefit longer-term financial objectives, such as saving for from retirement,’ advises Patrick Connolly, certified financial planner at Chase de Vere, a financial advice firm. REACHING YOUR MID-20S IS a 25% ‘As a minimum this should involve joining a company AN EXCITING BUT DAUNTING bonus pension scheme; even if they can’t afford to make large TIME. YOU HAVE COMPLETE from the contributions it is important to get started. The days FREEDOM OVER YOUR LIFE when people can rely on the State or their employer to CHOICES, BUT IT’S LIKELY Government look after them as they get older are largely gone.’ YOU’LL NO LONGER BE ABLE until you turn TO RELY ON YOUR PARENTS HOW TO USE THE DIFFERENT SAVINGS ACCOUNTS TO BAIL YOU OUT. 50 years old The ideal approach would be to invest in pensions for retirement planning, a Lifetime ISA to get on the Most millennials are focused property ladder, a stocks and shares ISA for short to on paying off debts and other medium term financial goals, and cash savings for short-term objectives like day-to-day emergencies. financing next year’s holiday Most people probably won’t have enough money and building that important to invest in all of these, so you may need to make emergency cash fund. some compromises. As you move towards the end The great thing about investing for retirement is of your 20s, getting on to the that you have a long investment time horizon and property ladder, marriage and ” so can afford to take on risk. While this may mean having children are common life investing mostly in equities, don’t be tempted to goals for many people. take unnecessary risks. Connolly suggests opting for equity-based funds HOW THE LIFETIME ISA WORKS that spread your money across different sectors The Lifetime ISA can be an and geographies, rather than individual shares or attractive way of saving up for your specialist funds. first home. Anyone aged between 18 and 39 can open an account. You can invest up to £4,000 FUNDSMITH EQUITY: KEY FACTS a year and benefit from a 25% bonus from the Government Morningstar says: ‘This is one of the strongest options for until you turn 50. Once you turn investors seeking exposure to high quality global equities’ 50, you can’t make additional The fund’s objective is to achieve long-term growth in value, contributions but your savings investing in shares of companies on a global basis will still earn interest or investment returns. It likes quality businesses which are resilient to change, If you don’t use the money particularly techological innovation to buy your first home, you can Current holdings include PayPal, Microsoft and Amadeus IT keep it as a retirement fund and The accumulation version of the fund has achieved 17.96% withdraw money once you hit 60. annualised return over 5 years There is a 25% charge to

05 April 2018 | SHARES | 27 tax and capital gains tax, and you’ll get 20% tax

XENNIALS relief on your contributions. (APPROX. AGE 33-43) This means that if you’re a basic rate taxpayer and want to contribute £100 to your pension, it Higher-rate would only actually cost you £80. The Government taxpayers adds an extra £20, which is the amount that you would have paid in income tax. can claim an Higher-rate taxpayers can claim an additional “additional 20% tax relief through their self-assessment tax return, meaning they only need to pay £60 into 20% tax their pension to achieve the same £100 of pension relief contributions. In addition to workplace pensions, it’s possible ONCE YOU’VE GOT YOUR through to save for your retirement through a SIPP FOOT ON THE PROPERTY their self- (self-invested personal pension). SIPPs give you LADDER, YOUR THOUGHTS assessment complete control over which investments you MAY NOW TURN TO BUILDING want to make. UP MONEY TO PAY FOR YOUR tax return, CHILDREN’S EDUCATION. meaning they THE BENEFITS OF INVESTMENT FUNDS ‘Diversification is important in managing risk and A stocks and shares ISA is a great only need volatility and by using investment funds you gain vehicle to use because it shelters to pay £60 exposure to a wide range of companies in one your money from tax, including investment product,’ suggests Coppin. any growth and dividend into their ‘These can be used to build a diverse portfolio payments you receive. You can pension to holding a wide range of assets – equities, bonds, withdraw money whenever you achieve the property, cash and so on.’ need it without paying tax. Some funds you may want to research You’re currently allowed to same £100 further include Vanguard Lifestrategy pay £20,000 each tax year across of pension 80% (GB00B4PQW151), Jupiter European all the different types of adult (GB00B5STJW84) and Stewart Investors Asia ISAs (stocks and shares, cash, contributions Pacific Leaders (GB0033874768). Innovative Finance and Lifetime).

INVESTMENT GOALS Your 30s and early 40s are also an ideal time to start thinking seriously about your retirement. VANGUARD LIFESTRATEGY: ‘It might seem early to start KEY FACTS thinking about retirement but we see all the time the benefits There are five versions of Vanguard’s of starting to save for this earlier ” Lifestrategy funds, offering a different blend of rather than later,’ says Matthew shares and bonds Coppin, manager, financial advice The 20% and 40% equity versions are aimed at Castlefield Advisory Partners. at investors with shorter-term goals ‘The impact of compound growth over the longer term The 60% equity version may interest someone on regular pension savings is with medium-term goals profound, if the investment The 80% and 100% equity versions are relevant strategy is suitable.’ for someone with longer-term goals Pensions are a great way of saving for retirement. Your Each fund invests in wide range of sectors money is protected from income and is regularly rebalanced

28 | SHARES | 05 April 2018 damage the value of your savings. GENERATION X A longer savings horizon does warrant putting your (APPROX. AGE 38-53) money into the markets. Indeed, if you’re at the peak of your earnings power – which many Gen X-ers are ISAs – this is a great time to make full use of the £20,000 are a great annual ISA allowance. It’s also worth maximising your pension way to contributions to benefit from Government tax “save for relief. Each year you can make contributions from UK earnings of up to £40,000, which applies to all shorter-term contributions – by you and by your employer. financial The rules are more complicated if you earn goals over £150,000. GENERATION X IS THE GROUP BORN BETWEEN because INVESTMENT IDEAS APPROXIMATELY 1965 AND you can ‘For a medium risk investor, looking to European 1980. YOUR CHILDREN, IF YOU equities could be interesting,’ says Ryan Hughes at HAVE ANY, ARE LIKELY TO BE withdraw AJ Bell. ‘The European economy has been recovering GROWING UP AND MAY HAVE money strongly during 2017 with every sign that this is likely MOVED OUT AND GOT THEIR to continue through 2018 as corporate earnings FIRST JOB, FREEING UP MORE whenever continue their good momentum,’ he says. OF YOUR MONEY. you like One of his top picks is CRUX European Special Situations (GB00BTJRQ064). If you’re still working, this could Higher risk investors could look towards Asia, be a good time to start saving for which has been a strong performer in recent years your lifelong dream – whether as Chinese growth fuels demand in the region. it’s a conservatory or even a Invesco Perpetual Asian (GB00BJ04DS38) looks Harley Davidson motorbike. to outperform the MSCI AC Asia Pacific Ex Japan If you save £230 a month over Index, predominately through a bottom-up research three years you could build a process focusing on contrarian ideas. savings pot of £10,000, assuming For lower-risk investors, Hughes suggests opting an annual return of 2%. ” for a multi-asset solution with an absolute return Saving over a longer period can mind set. For example, Troy Trojan (GB00B01BP952) make these monthly payments looks to deliver growth over the long term and a lot more manageable. For focuses on protecting capital. example, you could save £75 a month over 10 years to build the BEST BUY CASH ACCOUNTS same £10,000 nest egg, again assuming a 2% annual return. EASY ACCESS ISA RATE CURRENT ACCOUNT RATE Nationwide Building Nationwide (1 year, up 1.30% 5.00% INVEST IN CASH OR Society to £2,500) THE MARKETS? ISAs are a great way to save FIXED TERM ISAS RATE FIXED-RATED BONDS RATE for shorter-term financial goals OakNorth Bank OakNorth 1.47% 1.82% because you can withdraw (1 year) (1 year) money whenever you like. We UBL (3 years) 1.87% Paragon Bank (2 years) 2.09% would suggest keeping your savings in cash if you want to EASY ACCESS SAVINGS Vanquis Bank (3 years) 2.30% RATE hit a specific goal in a period ACCOUNTS of three years or less, so as to Tesco Bank 1.30% avoid the risks of negative stock market performance which could Source: Moneysavingexpert, 28 March 2018

05 April 2018 | SHARES | 29 ACCESSING YOUR PENSION

BABY BOOMER Once you reach age 55 you can start withdrawing (APPROX. AGE 54-72) money from your pension. You can withdraw 25% of your pension pot tax-free and the remaining 75% Once you is subject to income tax. reach When you’re planning withdrawals it is worth bearing in mind that spending in retirement isn’t age 55 usually linear. you“ can start Chadborn says many people want a higher income in their early years of retirement so they withdrawing can enjoy an active lifestyle while permitted by money from their health. The advantage of income drawdown over annuities is you have complete flexibility over WHETHER YOU’RE A YOUNG your pensions. how much money you withdraw and when. BABY BOOMER WHO IS You can ISAs can also play an important role in funding 10 YEARS AWAY FROM withdraw your retirement. There are no age restrictions, so RETIREMENT OR ALREADY if you want to stop working before age 55 you can IN RETIREMENT, PENSION 25% of withdraw money tax-free from your ISA instead. PLANNING SHOULD BE your Don’t forget that you’ll also be entitled to the AT THE FOREFRONT OF State Pension once you hit the State Pension age, YOUR MIND. pension pot which is currently 63 for women and 65 for men. tax-free Peter Chadborn, director at AGE-RELATED BENEFITS financial advice firm Plan Money, and the Other benefits after age 60 include free says your investment strategy remaining 75% prescriptions and eye tests; a free Oyster travel should be primarily driven by is subject to card if you live in London; and a free bus pass if you your risk appetite – and less so live in Scotland, Wales or Northern Ireland. by your time horizon. income tax. In England, women can get a free bus pass when If there is a specific date by they reach State Pension age, while men qualify which you need capital, such as when they reach the female State Pension age. funding a home move or buying If you were born before 5 January 1953, you an annuity, then your equity could be eligible for the tax-free Winter Fuel weighting should be gradually Payment. reduced as the end-date nears. ‘If the investment objective is changing from capital growth to income provision, but is still going to stay in the same ” investment vehicle, then there should be only modest change to the equity weighting,’ says Chadborn. ‘This is because the investment is not ending and income is then derived from the continued capital growth; the profit going forward.’

30 | SHARES | 05 April 2018 SILENT GENERATION INHERITANCE TAX FACTS (APPROX. AGE 73-93) Unlike ISAs, IHT is payable on the value of your assets pensions that exceed the threshold of don’t count £325,000 as“ part of It is charged at your estate for IHT 40% purposes. ONCE YOU REACH AGE 70 IT’S TIME TO START THINKING If you die An additional allowance ABOUT DE-RISKING YOUR before age for people’s main residence INVESTMENT PORTFOLIO. is also being phased in THIS IS BECAUSE YOU 75, your POTENTIALLY HAVE A beneficiary SHORTER INVESTMENT It applies where the recipient of the home TIME HORIZON. can access the pension is a direct descendant and is set at Zulekha Abdulla, consultant £125,000 at Mattioli Woods, a wealth via a lump sum management firm, says this is or by taking for the 2018/19 tax year, rising by more difficult than in the past income £25,000 because gilts (UK Government bonds) and other forms of tax-free each year until 2020. sovereign debt have moved from offering risk-free returns to offering ‘return-free risk’. ‘We recommend a diversified, ‘IHT planning can be as simple as gifting your multi-asset portfolio to navigate assets to your beneficiaries during your lifetime to this unconventional market insuring your IHT liability,’ says Abdulla. ‘Or it can be backdrop,’ she says. as elaborate – from investing in stocks and shares that benefit from IHT relief to trust planning. PASSING ON YOUR WEALTH ‘Each method can be used together or in Your 70s are also an ideal time ” isolation, and is dependent on the individuals’ to start thinking about estate estate and their personal circumstances.’ planning, so that you don’t Unlike ISAs, pensions don’t count as part of burden your family with a large your estate for IHT purposes. If you die before age inheritance tax (IHT) bill when 75, your beneficiary can access the pension via a you die. lump sum or by taking income tax-free. If you die after age 75, the lump sum or income is taxed at the beneficiary’s marginal rate of tax. One perk to look forward to once you reach age 75 is a free TV licence, saving you £150.50 a year. (EP)

DISCLAIMER: Editor Daniel Coatsworth has personal investments in Fundsmith Equity and Scottish Mortgage referenced in this article

05 April 2018 | SHARES | 31 UNDER THE BONNET We explain what this company does A novel way to earn income with Duke Royalty Picking companies to invest in can be risky but if you were guaranteed some of their revenue every year, it might be well worth it

raditionally when a company needs financing T but wants to retain control of its fortunes there are limited options available to it. Bank loans are probably the most popular but high street banks are still cautious in lending small to medium size enterprises (SMEs) cash despite government initiatives aimed at boosting business. Step in Duke Royalty (DUKE:AIM) which lends businesses money in return for a slice of the investees’ revenues. The terms of this agreement can be as long as 30-40 years and it doesn’t matter if the company goes through some tough times. Dutch river cruise operator Temarca is one of Duke Royalty’s investee businesses As long as it’s still generating some sales, Duke Royalty gets out when times are tough. DUKE’S BACKGROUND paid. Companies can pay back the Johnson says it’s a Relatively unknown in the UK, initial loan after several years with ‘fundamental promise’ that royalty financing has been used a fee although CEO Neil Johnson companies retain control of their in Canada and the US for years describes the deal as a ‘corporate finances. There’s never a need to with its roots in the commodity mortgage’. Benefits of keeping the refinance debt as often happens sector, especially mining. It has agreement running include extra when companies can no longer also been used in the biotech financing when needed. stick to their banking covenants. sector although neither area is of The company has an annual Duke Royalty takes the particular interest to Johnson. reset of the money it will take annuity-like royalty income He doesn’t want to invest back as repayment that is it receives from its investee in these types of businesses reflective of the movement of companies and returns some as they may have a finite the investees’ revenue in the of the cash to its shareholders lifespan. Mines will eventually last 12 months. The reset is in the form of dividends. run out of things to dig up restricted to plus or minus 6% of Stockbroker Cenkos forecasts and biotech companies will the original deal agreed between an attractive dividend yield of lose their patents on drugs the two parties. Therefore, around 8% for 2019 and 2020 after several years. In both although the company is not due in part to the low headcount these hypothetical situations impacted by the investee’s profit and lean operating model of a dramatic fall in earnings figure, it has the ability to help the business. is implied.

32 | SHARES | 05 April 2018 We explain what this company does UNDER THE BONNET

FINDING THE WINNERS foreseeable future means that team with a track record of When choosing a company, it won’t receive investment from delivering. It also likes businesses it’s vital that the right sort Duke Royalty. with little or no debt; in some of business is found as Duke ‘We avoid high obsolescence cases Duke Royalty will replace Royalty is exposed to equity risk. companies that run the risk of the existing debt with its own However, even in the worse- becoming outdated or obsolete financing. case scenario of a default or and those with high customer Examples of companies liquidation, Duke has senior concentration,’ says Johnson. where Duke Royalty has made security on assets so should be Duke Royalty also has a an investment include Dutch able to recoup some of its losses. comprehensive checklist of river cruise business Temarca. Further examples of types investee criteria which includes It invested €8m into a company of businesses Johnson avoids the company having an that has been around for 20 include the company behind established track record with years and has sold out the next mobile phone game Angry Birds, at least 10 years of predictable two sailing seasons so has clear Rovio Entertainment. Any hint and visible revenue. visibility of revenue. that the product is a fad and It prefers to come on board Another of Duke Royalty’s not going to be around for the with an existing management investments is Trimite, a Birmingham-based specialist coatings manufacturer. It has SHAREHOLDERS committed £9m to Trimite to fund its ‘anticipated future organic sales growth’. Duke Duke pays dividend Investors provide Royalty expects £1.2m annual yield of 7-8% Duke with capital royalty payments.

HOW DOES IT FIND OPPORTUNITIES? To find potential targets, Duke Royalty is aided by an exclusive partnership with consultancy firm Oliver Wyman, which

Pays initial royalty Duke provides Johnson describes as an ‘expert of 12-15% p.a. – royalty financing in every field’. According to adjusted annually of £5-£20m per broker Mirabaud, Wyman adds (paid monthly) transaction ‘extensive expertise in due diligence’ to Duke Royalty’s target acquisition. In total, Duke Royalty has three royalty investments and has signed non-binding terms on a fourth deal. The company raised around £20m through issuing equity at the end of last year to ensure it has the firepower to make further deals. It has £ also used some of the funds to top up pre-existing loans, for Capital Acquisition Balance sheet Shareholder instance investing a further £3m growth financing restructuring restructuring into Temarca. (DS)

05 April 2018 | SHARES | 33 FEATURE Four lessons to draw from 18¼ years of precisely zero from UK stocks There are various ways in which a investor could have achieved a better return than simply tracking the FTSE 100

potential takeover bid for a fourth FTSE 100 stock this year is helping the index to try to FTSE 100 IS ALMOST UNCHANGED cling on to the 7,000 mark, as Takeda’s plan RELATIVE TO ITS TECH-BUBBLE PEAK OF A 31 DECEMBER 1999. to consider an offer for drug manufacturer Shire (SHP) adds to the offers for GKN (GKN), Smurfit 9,000 Kappa (SKG) and Sky (SKY). 8,000 7,000 But that 7,000 mark is still awfully close to the 6,000 6,930.2 mark reached on 31 December 1999. At the 5,000 time, the latter level represented a new all-time high 4,000 for the FTSE 100 and turned out to be the very peak 3,000 2,000 for the benchmark index, as air promptly started 1,000 to leak out of the technology, media and telecoms 0 (TMT) bubble. Jan 11 Jan Jan 17 Jan Jan 13 Jan Jan 14 Jan Jan 15 Jan Jan 12 Jan Jan 16 Jan Jan 18 Jan Jan 01 Jan 10 Jan Jan 03 Jan Jan 02 Jan 07 Jan Jan 05 Jan Jan 04 Jan Jan 09 Jan Jan 08 Jan Jan 06 Jan Comparing that level to today’s position, the 00 Jan UK’s premier index has effectively gone nowhere for Source: Thomson Reuters Datastream just over 18 years. At its year-to-date closing low on 26 March of 6,889 it had even contrived to record a in at the top (when all seems rosy) and flee at the small loss over that period. bottom (when all seems bleak) which can be awfully For patient portfolio builders, that could make hard to resist. for depressing reading, but even in the face of Those investors who did try to time the market such apparent adversity it is possible to draw therefore needed to heed Warren Buffett’s aphorism four valuable lessons when it comes to portfolio about being ‘fearful when others are greedy and construction and asset allocation. greedy when others are fearful’. When greed is dominant, valuations are likely to 1. THE PRICE PAID FOR AN INVESTMENT REALLY be bubbly and sitting at unsustainable levels. When DOES MATTER fear is dominant, valuations are likely to be cheap Since 31 December 1999 high of 6,930, the FTSE 100 and build in a margin of safety. has seen two bear markets (2001-03 and 2007-09) So the price paid for an investment really is a key and two bull markets (2003-07 and 2009 onwards). determinant of the long-term return, where it is an Having lost that peak, it took the benchmark until index, fund or individual stock or bond. 2015 to reach it again and on 26 March 2018 it stood around half-a-percent below it at 6,889. 2. PICKING STOCKS CAN PAY OFF The message here is three-fold. At first glance, this (BUT IT ISN’T EASY) makes ‘buy-and-hold’ strategies look a bit sick (but Another way to try and get around the poor headline more of that in a moment). capital return from the FTSE 100 would be to try and Those investors who eschewed ‘buy-and-hold’ pick individual winning stocks and dodge the losers could have got into even worse trouble, if they did (or pay a fund manager to do it for you, if the time not resist the powerful temptation to be dragged and research effort involved are simply too much).

34 | SHARES | 05 April 2018 FEATURE

The good news is this could have paid off broke, dished out profit warnings and share price handsomely. No fewer than 56 of the 100 firms that collapses or were snapped up at lower prices made up the FTSE 100 in 1999 recorded a better following wider market declines). return than the broader index. The bad news is that only 51 still survive to this PATIENCE CAN STILL BE REWARDED day and of those only 32 have offered a positive Thankfully patience can get its reward and it comes capital return since the end of 1999. And of the 100 firms in total, 22 fell by more than BEST AND WORST 10 PERFORMERS AMONG ALL 50% and seven by more than 90%, inflicting real OF FTSE 100 MEMBERS AT THE 1999 PEAK pain on any fund manager or investor who picked Performance since out those as the new millennium dawned. No. Company In other words, spotting the winners (that either 31 Dec 1999 survived or were taken over for a fat price) was 1 British American Tobacco 1008.7% no easier than avoiding the disasters (that went 2 Reckitt Benckiser 921.5% BEST AND WORST 10 PERFORMERS AMONG THE 3 South African Breweries 619.7% 51 FTSE 100 MEMBERS AT THE 1999 PEAK THAT ARE STILL ON THE LONDON MARKET TODAY 4 Associated British Foods 597.5% Performance since 5 Imperial Brands 528.1% No. Company 31 Dec 1999 6 Rolls-Royce 485.5% 1 British American Tobacco 1,008.7% 7 Whitbread 473.6% 2 Reckitt Benckiser 921.5% 8 Diageo 372.8% 3 Associated British Foods 597.5% 9 BHP Billiton (Billiton) 330.7% 4 Imperial Brands 528.1% 10 Hays 317.9% 5 Rolls-Royce 485.5% 86 Invensys (BTR Siebe) (83.3%) 6 Whitbread 473.6% 87 Dixons Carphone (84.5%) 7 Diageo 372.8% 8 BHP Billiton (Billiton) 330.7% 88 Halifax (89.5%) 9 Hays 317.9% 89 Royal Bank of Scotland (90.9%) 10 Unilever 265.0% 90 Logica (92.2%) 41 Vodafone (39.2%) 91 CMG (93.7%) 42 DMGT (40.0%) 92 Colt Telecom (98.0%) 43 Barclays (48.6%) 93 Telewest (99.8%) 44 Aviva (Norwich Union) (50.5%) 94 Energis (99.8%) 45 Pearson (57.9%) 95 Marconi (99.9%) RSA (Royal & 46 (62.8%) Source: Thomson Reuters Datastream. Sun Alliance) Companies still in the FTSE 100 highlighted inBOLD . Covers period to 26 March 2018. 47 BT (79.4%) *No data available for Bass owing to break-up of company as Six Continents in 2003 (spawning Mitchells & Butler, InterContinental Hotels and ultimately Britvic). 48 Lloyds (Lloyds TSB) (81.8%) *No data available for CGU, which merged with Norwich Union to form CGNU, which became known as Aviva in 2002. 49 Dixons Carphone (84.5%) *No data available for Compass before 2001 merger with Granada. *No data available for Granada owing to 2001 merger with Compass and subsequent 50 Royal Bank of Scotland (90.9%) demerger of Granada Media, which then merged with Carlton to form ITV in 2004. *No data available for Great Universal Stores, which demerged Burberry in 2005 and Source: Thomson Reuters Datastream. No data available for Compass prior to 2001 the split into Experian and Home Retail in 2006, the latter being acquired and broken merger with Granada, though stock was a FTSE 100 member on 31 December 1999. Covers period to 26 March 2018. up by Sainsbury and Wesfarmers in 2016.

05 April 2018 | SHARES | 35 FEATURE

in the form of dividends. These precious payments further boosted returns from overseas arenas mean that holding a passive index tracker can (although none of these trends are guaranteed pay off, as can operating a buy-and-hold strategy to repeat themselves in the future). (providing investors’ portfolios are capable to withstanding the ups and downs in capital values UK HAS DONE BADLY RELATIVE TO KEY in between). OVERSEAS MARKETS SINCE THE END OF 1999 This can be demonstrated by looking at the The UK’s generally superior dividend yield helps a performance in the FTSE 100 in purely capital little in total return terms but the showing relative to returns and total return terms. In the latter case, international options has still generally been poor. dividends are harvested and then reinvested. The difference is startling – but again, it must be remembered that even the total return index CAPITAL RETURNS SINCE 31 DECEMBER 1999 suffered two large falls during the 2001-03 and 2007-09 bear markets, even if they were not as Local currency In sterling pronounced as the declines in the headline index. Latin America 170.5% Latin America 348.6% Eastern Europe 142.8% Eastern Europe 175.1% FTSE 100 price FTSE 100 total index return index Asia Pacific 117.3% Asia Pacific 146.2% 31-Dec-99 6,930.2 3,140.7 US 80.9% US 102.7% 26-Mar-18 6,888.7 5,902.5 Western Japan 9.7% 34.6% Europe Change (0.6%) 87.9% Source: Thomson Reuters Datastream. UK (0.6%) Japan 21.1% Western (4.3%) UK (0.6%) EVEN THE FTSE TOTAL RETURN INDEX HAS Europe SUFFERED DIPS, DESPITE THE ADVANTAGES OF Source: Thomson Reuters Datastream. Covers period to 26 March 2018 DIVIDEND REINVESTMENT

7,000 UK HAS DONE BADLY RELATIVE TO KEY OVERSEAS MARKETS SINCE THE END OF 1999 EVEN 6,000 ALLOWING FOR ITS SUPERIOR DIVIDEND YIELD 5,000

4,000 TOTAL RETURNS SINCE 31 DECEMBER 1999 3,000

2000 Local currency In sterling 1000

0 Latin America 377.3% Latin America 440.8% Jan 11 Jan Jan 17 Jan Jan 13 Jan Jan 14 Jan Jan 15 Jan Jan 12 Jan Jan 16 Jan Jan 18 Jan Jan 10 Jan Jan 01 Jan Eastern Europe 309.3% Jan 03 Jan Jan 02 Jan 07 Jan Jan 05 Jan

Jan 04 Jan Eastern Europe 364.0% Jan 09 Jan Jan 08 Jan Jan 06 Jan Jan 00 Jan Source: Thomson Reuters Datastream US 157.6% Japan 209.3% Japan 144.0% US 191.8% BEWARE HOME BIAS Western One way of getting around the UK’s disappointing Asia Pacific 117.3% 146.2% headline performance since the end of the Europe 1990s bull-run would have been to fight any UK 87.9% Asia Pacific 146.2% natural home-leaning bias and diversify by Western 78.3% UK 87.9% looking overseas. Europe In capital terms the UK has lagged all major Source: Thomson Reuters Datastream. Covers period to 26 March 2018 overseas geographies in local currencies. A drop in the pound over the period has Russ Mould, investment director, AJ Bell

36 | SHARES | 05 April 2018 Only SHARES magazine subscribers benefi t from an investment INVESTMENTtoolkit that gives them the edge and helps them make the very FACTS.Do you have best investing decisions. WHO CAN YOU TRUST? the SHARES • Live share prices • Customisable live watch list In uncertain times, when the • Portfolio manager economyadvantage? is buffeted by change, • Fund selector and prices it can be hard to know who to • Intraday and historic charts trust when investing. • Latest broker forecasts with alerts • Latest director deals with alerts Shares magazine is produced by our expert editorial team, offering 24/7 coverage and insight into today’s vibrant • Fundamentals and investor tools investment markets. • Online discussion forum A subscription to Shares gives you access to the SHARES • Priority booking for investor digital investment hub and a host of benefits including: events > Your weekly digital magazine brimming full • Educational and company videos of investment ideas • …and of course, the weekly > Market news and company updates digital Shares magazine with the > Exclusive investor tools including live share prices latest news and views from the Shares experts Try it now for just £1 for the 1st month and then just £12 a month*. £

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* The £1 for 1 month and then £12 a month offer is only available to new subscribers. Your fi rst payment will be £1 and thereafter subscriptions will automatically continued, billed at £12 per *month The £1 unless for 1 monthcancelled. and thenSubscriptions £12 a month can offer be cancelled is only available at any time to new by callingsubscribers. 020 7378 Your 4424 first between payment 8am will - be4.30pm £1 and on thereafter Monday tosubscriptions Friday. No refunds will automatically are offered duringcontinued, the cancellationsbilled at £12 per monthperiod unlessbut all cancelled.outstanding Subscriptions issues and services can be cancelled will be fulfi at lled.any time For enquiresby calling contact 0207 378 us 4424 at [email protected] between 8am - 4.30pm on Monday to Friday. No refunds are offered during the cancellations period but all outstanding issues and services will be fulfilled. For enquires contact us at [email protected] First quarter update on our 2018 SHARE PORTFOLIO

We’re hopeful of a better performance as the year progresses

ur top picks for 2018 are lagging the broader Full year results published on 20 March showed a market at the end of the first quarter. Our 128% increase in pre-tax profit to £111.7m; its loan portfolio of 10 stocks has an average loss book up 42% to £5.4bn; and 28.6% return on equity. of 8.4% versus a 6% decline from the FTSE Investec analyst Ian Gordon believes niche banking OAll-Share. companies like Charter Court offer ‘materially better While this is a disappointing start, our selections value’ than the more ‘structurally challenged’ FTSE were designed to be held for at least a year, so we 100 banks. remain hopeful that some of the laggards will pick up as the year progresses. SHARES’ 2018 PORTFOLIO Before we look at the individual constituents, it is Entry Price % gain Company worth considering the state of the market as a whole. price (p) now (p) / loss Our selections were made on the eve of a stock Charter Court 251.88 294.5 16.9 market correction, so we’ve been battling negative Financial Services investor sentiment almost from the start. Alliance Pharma 61.38 68.8 12.1 The market has also punished highly rated stocks with the slightest bit of bad news, which is relevant Johnson Matthey 3066 3074 0.3 to several of our selections. AB Dynamics 942.5 935 -0.8 Investors in general currently seem to be nervous about buying stocks that have fallen in value, so we Dixons Carphone 190.35 185 -2.8 haven’t seen any widespread ‘bottom fishing’ since Future 394.88 361 -8.6 the market correction earlier this year. DotDigital 97 84 -13.4 STOCKS IN FOCUS Sage 785.5 645.6 -17.8 Half of our portfolio has outperformed the stock Biffa 253.38 201 -20.7 market, albeit only three of these stocks are in positive territory. Dignity 1691.5 863.5 -49.0 Charter Court Financial Services (CCFS) is up AVERAGE -8.4 by 16.9% to 294.5p, helped by the strength of the buy-to-let mortgage lending market and more FTSE All-Share 4146.97 3896.87 -6.0 investors becoming aware of the stock. Entry prices taken 19 Dec 2017. Latest prices taken 29 March 2018

38 | SHARES | 05 April 2018 ALLIANCE PHARMA LOOKING GOOD have to rebuild their marketing databases. Alliance Pharma (APH:AIM) is gaining traction A weak first quarter update in January from as strong international sales growth drives its Sage (SGE) served to pull down its share price. It impressive performance. Underlying pre-tax profit suffered some revenue delay due to sales personnel increased by 8% to £24m in 2017. receiving, in aggregate, around two weeks’ training Its shares are up by 12.1% to 61.38p since we time on the new ‘Sage Business Cloud’ product said to buy last December and we expect them to suite, as well as a poor show from its French end the year even higher. operations. A stronger second quarter update could The shares aren’t expensive at 14.9 times be the catalyst to revive the share price. forecast earnings for 2018 given that analysts Biffa (BIFF)was trading on 11.9-times forecast predict 12% compound annual growth in earnings earnings for the year to 31 March 2019 on the eve of per share for the next three years. its disappointing trading update last month. Ongoing restrictions for exporting paper recyclates to China A FEW STOCKS SITTING QUIETLY prompted an 8% downgrade to the March 2019 Johnson Matthey (JMAT) and AB Dynamics financial year’s earnings per share (EPS) estimate. (ABDP:AIM) are sitting close to our entry level The shares have fallen by more than twice the on each stock. The latter recently issued a decent EPS downgrade, down 19% to 201p. They now trading update and said its new chief executive trade on 10.4 times forecast earnings which seems should start in the summer. It is bringing in unjustified given its core business is still trading well someone new to drive corporate development. and earnings forecasts now assume zero financial Dixons Carphone (DC.) is down 2.8%, roughly contribution from exports to China for at least the half the decline in the broader market, which next two years. isn’t bad considering ongoing negative sentiment A planned bottle and can deposit return scheme towards retail stocks. Its trading update in January in England could even create more recycling was fairly decent and the share valuation is already volumes, benefiting collection companies like Biffa. discounting a tough market. A new chief executive And finally we have Dignity (DTY) which has and a new finance director bring some excitement halved in value since we said to buy. The business to the investment case. model has completely changed since our original Media group Future (FUTR) is down 8.6% but article. A major overhaul of its pricing structure we certainly don’t expect the stock to remain in the radically changes its potential earnings capability red. Research group Edison recently commented: and thus the investment case. ‘The share price has drifted back from recent highs We see better opportunities elsewhere in the and we consider that the current rating does not market and believe now is the time to cut your fully reflect the opportunity.’ The shares currently losses on Dignity. The risk is another profit warning; trade on 15.6 times forecast earnings for the year the potential reward is a private equity takeover. We to September 2019. don’t think the risk/reward balance favours keeping the shares. (DC) THE DISAPPOINTING FOUR The market reacted negatively to DotDigital’s (DOTD:AIM) half year results in February. A mere 1.5% pre-tax profit growth called into question the company’s share valuation. Prior to the figures the shares traded on 32 times forecast earnings for the current financial year. Such a rating would normally warrant faster earnings growth. There were some delays to customers buying services from DotDigital ahead of new data regulations called GDPR which come into force in May. That’s something to watch closely in the near-term in case the regulations lead to a short- term drop in email marketing activity (and thus demand for DotDigital’s technology) as companies Dignity shocked the market in January with a radical change to its business model

05 April 2018 | SHARES | 39 MONEY MATTERS Helping you with personal finance issues How to use past performance figures wisely

Historic data can be a useful way of comparing funds – as long as it’s put in context

und managers always warn investors that Fpast performance is not a reliable indicator of The risk for investors, future performance. But past who place too much performance figures can be really useful when comparing emphasis on past funds and assessing how performance, is that managers cope in different they buy funds just market conditions. “as they are peaking So how do you use the figures wisely? We spoke to and when strong three experts to find out. investment gains have already WHAT’S WRONG WITH RELYING ON PAST been made PERFORMANCE? It’s tempting to look at short-term past performance figures and buy funds that are riding high in the tables. The problem is that funds which are at the top of the tables don’t stay there forever. ‘And they sell funds which fund manager at AJ Bell. ‘Names A fall could be just around the have performed” badly and so that come to mind include corner, whereas funds that are crystallise their losses just as Richard Buxton, Neil Woodford at the bottom could be in line for performance is set to improve.’ and Anthony Bolton. a revival. Even star fund managers with ‘When market conditions ‘The risk for investors, who a long, positive track record change this can present place too much emphasis can fall into difficulties. It’s very fund managers with either a on past performance, is that unlikely that a fund will be able headwind or a tailwind to their they buy funds just as they to consistently outperform investment process. For instance, are peaking and when strong through different market cycles. we have recently experienced a investment gains have already ‘Veteran fund managers that market environment which has been made,’ says Patrick have been held with the highest been very supportive of growth Connolly, certified financial regard in the industry have all investing and hence value as a planner at financial advice firm experienced tough times,’ says style has been out of favour for Chase de Vere. Simon Molica, active portfolios some time now.’

40 | SHARES | 05 April 2018 Helping you with personal finance issues MONEY MATTERS

SHOULD I USE PAST HOW DO I USE WHAT ELSE PERFORMANCE FIGURES THE DATA SHOULD AT ALL? INTELLIGENTLY? I LOOK AT? There are lots of different factors to look at when deciding whether to invest in a fund. It’s important not to look at Molica recommends past performance data without analysing the experience thinking about the external of the individual or team factors that could have skewed involved in running the the figures. strategy; the robustness Try to understand why and repeatability of the the fund is outperforming or investment process driving It’s difficult to assess funds underperforming – and then the fund; and the costs. without looking at their consider if anything might ‘The industry is more past performance, but you change in the future. transparent today than ever shouldn’t let historic data To do this you need to have before, with information be the sole basis of your a good understanding of the being widely available from investment decisions. investment team running the the fund groups’ websites,’ Darius McDermott, fund and the approach they take. he says. ‘Documents such as managing director at Chelsea In some cases the fund may fund factsheets, Key Investor Financial Services, says: ‘When have grown too large. Information Documents I compare fund managers I Some funds may simply be at (KIIDs) and fund prospectuses will look at past performance, the top of the tables because should be useful tools when but it’s not the only thing I their style or sector is currently considering an investment.’ assess. I’ll analyse how volatile in favour. If the style or sector Some commentators performance is, and how becomes out of favour, their suggest investors should select managers perform when performance could soon go funds based on cost rather markets go down as well as up.’ into reverse. than past performance. But McDermott says fund ‘Many successful fund McDermott says investors managers who can perform managers have experienced should never let costs drive well in declining markets tend periods of underperformance their investment decisions. to be the good ones. at some point during their ‘The FTSE 100 is at roughly You should never base your careers,’ says Molica. ‘For the same level as it was 18 years investment decisions on instance, with a contrarian ago, so if you’d bought a low- short-term data, as this won’t investment process the point is cost tracker your return would give you any indication of how to go against the crowd – this be entirely based on dividends,’ the fund reacts to different requires patience and therefore he argues. ‘A more expensive market cycles. by design will deviate heavily product with lots of good fund Chase de Vere’s Patrick against an index and peers.’ managers would probably have Connolly says investors should Whenever you’re comparing made higher returns.’ look for funds that are most data, it’s crucial to compare McDermott points out that likely to produce long-term funds in the same sector so past performance figures are consistent returns, rather than that you can get a good idea always shown net of all fees, so those you think might produce of how well a fund has done you can see for yourself whether short-term stellar returns. relative to its peers. the costs are worth it. (EP)

05 April 2018 | SHARES | 41 MONEY MATTERS Helping you with personal finance issues The Canadian lottery conundrum: $1m today or $1,000 a week for life? Many UK workers face a similar decision with regards to taking a lump sum or keeping their defined benefit pension

hat would you do if the money is stuffed in a 0% your side, you should still think you were offered a paying bank account. very carefully if you are offered Wchoice of £1m today In this scenario, it will take the option to swap a guaranteed or £1,000 a week, tax-free for Charlie just 19 years to hit the income stream for cash. the rest of your life? C$1m tipping point, and if she Let’s imagine Darren, a healthy This was exactly the lives until age 82 – the average life 60 year-old steelworker with a conundrum facing 18 year- expectancy in Canada according ‘defined benefit’ pension offering old Charlie Lagarde, from the to the World Bank – she’ll receive a guaranteed income for life province of Quebec, when a total prize worth over C$3.3m from age 65 of £10,000 a year. she won the Canadian lottery by taking an income. The pension comes with valuable recently. Well, almost – her Even assuming average inflation protection baked in too. choice was between C$1m inflation of 3% steadily erodes the Darren’s former employer (about £550,000) or C$1,000 value of her income payments, might offer him £100,000 in cold, tax-free a week. she would still be better off in real hard cash to give up his pension. After speaking to a financial terms by her late 40s. Many would be tempted to take adviser (Charlie is clearly a very Alternatively, Charlie might such an offer because, as human sensible teenager) she opted for decide to invest all her winnings beings, we often naturally the income option rather than in order to protect it from the prefer a smaller amount of the lump sum. But was she right? ravages of inflation and benefit money today over the promise And what retirement planning from some market growth. of a larger amount tomorrow. lessons can we learn? Assuming investment returns This is known as ‘hyperbolic of 5% after charges, she would discounting’. KEY CONSIDERATIONS again be better off taking the However, provided Darren Whether or not Charlie made income prize option – but only lives into his 80s, the retirement the ‘right’ decision depends once she reaches the age of 68. income would be much more on her own personal needs By the age of 82, she would have valuable – particularly because and circumstances. If she had C$24.9m compared to C$23.8m inflation risks eating away at the significant credit card debts by investing the lump sum. fund if he chose to cash in. racking up interest or an If you’re lucky enough to be in expensive mortgage to pay off, ‘HYPERBOLIC DISCOUNTING’ a similar position to Charlie – no for example, it might have made The key factor in Charlie’s case is matter what your age – be sure sense to take the lump sum in her age – because she is so young, to consider the overall value of a order to rid her of this burden. the weekly payments work out to secure income stream, and don’t Assuming this isn’t the case, be more valuable (provided she make a rash decision based on however, it appears she has made lives to somewhere near average the lure of a large lump of money the right call. Let’s start with the life expectancy). right now. simplest example, ignoring the When you reach retirement, impact of inflation and assuming while there might be less time on Tom Selby, senior analyst, AJ Bell

42 | SHARES | 05 April 2018 You invest Invest from £25 a month in a low-cost DIY pension You choose Choose from a wide range of investment options You benefit Low-cost dealing from as little as £1.50

Hurry. Open an account today Tax year youinvest.co.uk ends Low-cost SIPPs, ISAs, funds and shares 5 April

We don’t offer advice about the suitability of our products or any investments held within them, if you require financial advice you should consult a suitably qualified financial adviser. Tax treatment depends on your individual circumstances and rules may change. The value of investments can go down as well as up and you may get back less than you originally invested.

AJ Bell Management Limited, AJ Bell Securities Limited and AJ Bell Asset Management Limited are authorised and regulated by the Financial Conduct Authority. All companies are registered in England and Wales at 4 Exchange Quay, Salford Quays, Manchester M5 3EE LARGER COMPANIES Phoenix could be the best income stock you’ve never heard of One analyst reckons its shares should trade on a higher rating, implying capital gains alongside generous income for investors

hoenix (PHNX) is the UK’s largest their current price, as that would help bring the consolidator of closed life assurance yield down. Pfunds or insurance policies that are no longer open to new business. IS THE BUSINESS GROWING? It may seem a pure income play, offering a For Phoenix, the Standard Life Aberdeen prospective dividend yield of 6.8% for 2018. Assurance deal is a gamechanger, as its business That makes it the 35th largest dividend yield in relies on scale for returns on capital and costs. the UK after Phoenix’s £3.2bn acquisition of The deal extends Phoenix’s reach beyond the Standard Life Aberdeen’s (SLA) Assurance business £380bn potential market in the UK to £540bn in February, according to analysts. of potential assets across the UK, Germany But many income investors may never have and Ireland. heard of Phoenix, despite its solid history and This sort of extra scale represents an additional promising future of dividend payments. £5.5bn of cash flows over time, with £1bn Investment bank Berenberg analyst Trevor Moss expected before 2022. This extra cash will drive says the market still doesn’t ‘appreciate the merits future dividend payments. of closed book consolidation and therefore Phoenix The integration of the Assurance business will in particular’. take time, at least two years but Berenberg’s Moss However, he adds the yield is too high, saying it believes it could eventually launch Phoenix into should reflect a business ready to grow its dividend the FTSE 100 index. while writing new business, rather than ‘one that is closed forever and running off to zero’. Essentially, CHANGING BUSINESS MODELS he thinks the shares should trade much higher than The life insurance sector is changing. Standard Life 60 Aberdeen wanted to become a ‘capital light’ asset PHOENIX’S DIVIDEND PROFILE manager hence why it decided to dispose of its ‘capital intensive’ Assurance business. 50 51.70P 51.70P 50.20P Similar examples of change in the life insurance 46.61P 45.4P model include companies looking to cut costs by 40 outsourcing non-core activities and concentrate on what they’re good at. Phoenix can pay 30 attractive prices for businesses that no longer fit into a group’s model.

20 Phoenix’s expertise with closed funds allows it to provide a scalable platform for further funds and its scale gives it the ability to be more efficient. 10 The company recently announced it is in an exclusive agreement over another annuity 0 2015 2016 2017 2018E 2019E transaction, demonstrating its ambition to build Source: Berenberg, Company data on the Assurance deal. (DS)

44 | SHARES | 05 April 2018 SMALLER COMPANIES Destiny Pharma targets $1bn US market with anti- microbial resistant drug

The company’s anti-infective XF-73 could have the potential to kill bacteria within 15 minutes

linical stage biotech company Destiny Destiny Pharma is fully funded for its Phase IIb Pharma (DEST:AIM) is taking on antimicrobial trial, with FinnCap analyst Mark Brewer forecasting Cresistance with its anti-infective XF-73 it has enough cash until the end of 2020. treatment in hopes of taking a share of the $1bn ‘Additional funding will be required to take US market. Antimicrobial resistance occurs if a XF-73 into a Phase III trial should the company micro-organism is able to stop an antimicrobial, elect to do so, by which point we expect a licence/ including antibiotics, from working against it. partnership deal to have been signed for Western Destiny Pharma joined the stock market in markets,’ says Brewer. September 2017 and is planning to start a The anti-infective is significantly de-risked after Phase IIb trial later this year for its lead candidate five successful Phase I/IIa clinical trials proved it XF-73, with data expected in mid-2019. was safe. Investors should note these trials make it more likely the upcoming data will be positive, but HOW DOES XF-73 WORK? this is not guaranteed. XF-73 is an exciting drug product designed to Last month, Destiny Pharma announced XF-73 rapidly bind to bacterial membrane, making it has been designated a Qualified Infectious Disease porous and forcing the bacteria to leak out, Product by the US Food and Drug Administration killing it within 15 minutes. (FDA). Essentially this means the FDA will fast track Destiny Pharma is targeting superbug MRSA. its review and provide an additional five years of XF-73 shows early promise as the bacteria did marketing exclusivity. not demonstrate any resistance after 55 repeat exposures. WHY IS ANTIMICROBIAL RESISTANCE SO DANGEROUS? WHY XF-73 IS ‘SIGNIFICANTLY DE-RISKED’ Antimicrobial resistance is becoming a huge threat, Investing in pharmaceutical firms can be risky prompting urgent calls for treatments from the due to the possibility of clinical trial failure or the likes of the World Healthcare Organisation. company running out of money in the early stages In 2016, economist Lord Jim O’Neill estimated where it is generating limited or no revenue. 700,000 deaths globally could be attributed to anti-microbial resistance every year. CLINICAL TRIALS COMPLETED ON XF-PLATFORM (XF-73) He warned the number of deaths associated Number of Dosing Antibiotic Dose Safety with antimicrobial resistance will outstrip deaths subjects period from cancer and diabetes combined by 2050. XF-73A01 23 5 days Low (0.075mg/g) Yes Brewer says antimicrobial resistance is being XF-73B01 45 5 days Higher (0.5mg/g) Yes taken more seriously, flagging financial penalties XF-73B02 32 5 days Higher (2mg/g) Yes in the US for hospitals with consistently high levels XF-73B03 60 2 days Lower viscosity gel Yes of MRSA. DMID-11- 56 5 days Lower viscosity gel Yes A US launch for Destiny Pharma’s potential 0007* blockbuster drug has been targeted for between Source: FinnCap * All funded by Destiny Pharma except DMID-11-0007 (funded by US gov) 2020 and 2021. (LMJ)

05 April 2018 | SHARES | 45 NOW IS THE TIME TO FOCUS ON YOUR INVESTMENT PORTFOLIO Are you looking for new companies to invest in? Come and join Shares at its evening event in London on Wednesday 11 April 2018 and meet directors from Burford Capital, Cadence Minerals, Phoenix Global Mining and Tekcapital.

Sponsored by London – Wednesday 11 April 2018

Companies presenting

Burford Capital (BUR) Christopher P. Bogart, CEO Burford Capital is a leading global finance and investment management firm focused on law. Its businesses include litigation finance and risk management, asset recovery and a wide range of legal finance and advisory activities. Burford is publicly traded on the London Stock Exchange, and it works with law firms and clients around the world from its principal offices in New York, London, Chicago and Singapore.

Cadence Minerals (KDNC) Kiran Morzaria, Director & CEO Cadence is dedicated to smart investments for a greener world. The planet needs rechargeable batteries on a global scale – upcoming supersized passenger vehicles, lorries and buses require lithium and other technology minerals to power their cells. Cadence is helping find these minerals in new places and extracting them in new ways to help meet the demand of this burgeoning market.

Phoenix Global Mining (PGM) Speaker TBC Phoenix is a US-focused base metal explorer and developer focused on advancing the Empire Mine in Idaho into open pit copper oxide production, with additional upside available from potential underground development. The company intends to deliver production from the Empire Mine in two phases in order to minimise upfront capital requirement and lead-time to cash flow.

Tekcapital (TEK) Malcolm Groat, FD Tekcapital is a UK IP investment group focused on creating market value from university technology. It aims to accomplish this by acquiring, enhancing and developing bright new discoveries from their network of over 4,500 universities and research centres in 160 countries. It also provides a suite of bespoke tech transfer services to accelerate commercialisation of university innovations.

Follow this link www.sharesmagazine.co.uk/events for full details.

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During the event and afterwards over drinks, investors Event details will have the chance to: Location: Novotel Tower Bridge, London EC3N 2NR

Discover new inv estment opportunities Registration 18:00 Presentations to start at 18:30 Complimentary drinks and buffet available after the presentations Get to know the companies better Contact

Chris Williams, Spotlight Manager Talk with the company directors [email protected] and other investors 020 7378 4402

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The value of investments can go down as well as up and you may get back less than you originally invested. We don’t offer advice about the suitability of our products or any investments held within them, if you require financial advice you should consult a suitably qualified financial adviser. Tax treatment depends on your individual circumstances and rules may change.

AJ Bell includes AJ Bell Holdings Limited and its wholly owned subsidiaries. AJ Bell Management Limited and AJ Bell Securities Limited are authorised and regulated by the Financial Conduct Authority. All companies are registered in England and Wales at 4 Exchange Quay, Salford Quays, Manchester M5 3EE

KEY DotDigital (DOTD:AIM) 39 Kore Potash (KP2:AIM) 8 Scottish Mortgage 27 Investment Trust • Main Market Duke Royalty 32 Marks & Spencer 21 (SMT) • AIM (DUKE:AIM) (MKS) Serica Energy 14 • Fund Fidelity Index World 26 McColl’s Retail (MCLS) 7 (SQZ:AIM) • Investment Trust (GB00BJS8SJ34) Merlin Entertainments 7 • IPO Coming Soon Fidessa (FDSA) 6 (MERL) Shire (SHP) 34 Foreign & Colonial 12 Micro Focus (MCRO) 6 Sirius Minerals (SXX) 8 Investment Trust Mitchell & Butlers 7 (FRCL) (MAB) AB Dynamics 39 Fundsmith Equity 27 Miton (MGR:AIM) 11 (GB00B41YBW71) (ABDP:AIM) Miton UK Smaller 11 Alliance Pharma 39 Future (FUTR) 39 Companies Fund (APH:AIM) GKN (GKN) 34 (GB00B818N094) Sky (SKY) 34 Aveva (AVV) 6 Greene King (GNK) 7 Miton UK Value 11, 17 Smurfit Kappa (SKG) 34 Biffa (BIFF) 39 Hilton Food (HFG) 13 Opportunities (GB00B8KV0M06) Sophos (SOPH) 6 Billington (BILN:AIM) 13 Invesco 29 BP (BP.) 14 Perpetual Asian Miton US Smaller 11 Spectrix (SXS) 18 (GB00BJ04DS38) Companies Fund Standard Life 44 (GB00BF54H991) Invesco Perpetual 17 Aberdeen (SLA) High Income Odyssean Investment 10 Stewart Investors 28 (GB00BJ04HQ93) Trust Asia Pacific Leaders JD Wetherspoon 7 Phoenix (PHNX) 44 (GB0033874768) (JDW) Rentokil Initial (RTO) 21 Strategic Equity 10 Revolution Bars 7 Capital (SEC) C&C (CCR) 7 (RBG:AIM) Superdry (SGP) 10 Charter Court 38 Tesco (TSCO) 7, 13, Financial Services 20 (CCFS) The Scottish 20 Conviviality (CVR:AIM) 7 Investment Trust CRUX European 29 (SCIN) Special Situations Johnson Matthey 39 Troy Trojan 29 (GB00BTJRQ064) (JMAT) (GB00B01BP952) Danakali 8 JPMorgan Multi-Asset 18 Vanguard 27 Trust (MATE) River and Mercantile 18 Lifestrategy 100% Destiny Pharma 45 UK Equity Smaller (DEST:AIM) Jupiter European 28 Equity (GB00B5STJW84) Companies Fund (GB00B41XG308) DFS Furniture (DFS) 7 (GB00B1DSZS09) Keywords Studios 14 Vanguard Lifestrategy 28 Dignity (DTY) 39 (KWS:AIM) Sage (SGE) 6, 39 80% (GB00B4PQW151) Dixons Carphone (DC.) 18 Schroder UK Alpha 17 Worldpay (WPY) 6 Plus (GB00B5L33N61)

05 April 2018 | SHARES | 47