Investors in Values

LWM Consultants Ltd.Financial Planners

Investment Philosophy and Process

“Its only when the tide goes out that you learn who’s been swimming naked”

1. Objectives2. Philosophy3. Process4. Benchmark5. The team6. Facts and figures7. Summary

Agenda

Objectives

We are passionate about investing, and take a lot of our learning from the greats – Buffett, Lynch, Grantham et al.

Our key client objectives are:

To maximise returns whilst minimising the risk of loss

To focus on long term value driven goals rather than short term opportunistic thinking

To adopt a robust and consisted selection process to identify first rate funds and asset managers

Objectives

Philosophy

Our philosophy is to:

Deliver an impartial, rigorous and unbiased selection process

Deliver consistent risk and return traits

Identify the most suitable funds and managers and blend them in the most appropriate manner

Continually monitor existing assets as well as identifying new opportunities as they arise

Investment philosophy

Process

The main principles behind our process are to:

Avoid making outsized bets on sectors or markets as we believe over time and annual rebalancing (selling back risen investments to buy the fallen) this will systematically achieve the desired results

Gather analytical data and meet fund managers before making decisions. Only by meeting and listening can you really get an understanding for the investment opportunity

Search out good managers, demonstrating rigorous logic and reason, with a strong mandate and support system

Implement a strategy that delivers long term returns through patience, skill and persistence

Process

The main process for pre-selection includes:

Asset Allocation tools – we use strategic asset allocation as a starting point and then overlay this with our own tactical allocation; meaning we may go overweight / underweight in particular sectors or regions

Underlying assets - we use UK, Dublin and Luxembourg domiciled funds, and investment trusts. We may consider ETFs and / or Passive Funds if appropriate

Analytical tools - we use tools such as Morningstar and Trustnet to identify the best funds in terms of performance over a number of timeframe periods. We normally look to bring forward a maximum of five to ten funds from each sector

Process – pre-selection of assets

We use a combination of desk based research, questionnaires and meetings to arrive at our selection list:

Using Morningstar and Trustnet we analysis all aspects of the funds including volatility, holdings, correlation

We look to understand process and philosophy as well portfolio turnover and exit strategy

We look to break (how it can go wrong) a fund before it makes it to the final list

Process – selection of assets

Our aim is to meet as many fund houses and fund managers as possible whether this is face to face, telephone conference calls or other routes to gain deeper insight to their investment strategy.

How investment ideas are generated

How the ideas are processed for inclusion in a fund

What makes a company more attractive than another to the fund

How the fund manager interacts with other teams in their company

How risk is measured and controlled

Rational behind the current fund structure, and whether this is consistent with their stated philosophy and process

Process – selection of assets

“Ultimately through our selection process we are looking identify funds which will deliver sustainable

long term performance.”

Process – selection of assets

Our investment committee will discuss portfolio construction and opportunities. The committee will look to construct portfolios around funds they have a strong conviction in, effectively the portfolio consists of the “best ideas” filtered through a series of analytical tests.

Key elements of portfolio construction are:

To review the asset allocation model and agree on any tactical allocation changes

To select between 25 – 30 funds per portfolio (although the committee have the authority to go above or below this limit)

To adopt a long term hold approach

To ensure the funds when combined complement each other

To ensure the portfolios provide the best balance between risk and reward

Construction

We continually monitor and evaluate the portfolios:

We analysis the volatility of portfolios on a quarterly basis and returns on a monthly basis

We constantly track the performance of funds, meet fund management groups and discuss issues at our quarterly investment committee meeting (or earlier where required)

We monitor funds to identify any potential warning signs

We believe in long-term holdings and we won’t sell out unless:

There has been a material change to the investment philosophy or process

There has been significant changes to the team of investment professionals

Performance is inconsistent with its stated aims

A superior fund has been identified in the same investment area

On-going monitoring

We believe communication is key – we provide clients with:

Quarterly newsletters including a macro view of the markets and performance data

Regular email updates, including access to notes from fund management meetings as well as our blog

Regular feeds via twitter and Facebook

Half yearly performance updates, as well as the offer to rebalance portfolios on an annual basis

On-going monitoring

Performance Benchmarks

Each of the portfolios has a percentage weighting to sectors depending on the risk / reward profile

The benchmark is taken from the performance of the following sectors:

Benchmarks

Sector BenchmarkFixed Interest iShares Global Inflation Linked Govt Bond

iShares J.P.Morgan $ Emerging Mkts Bond Property iShares Developed Markets Property Yld UK iShares UK Dividend

Lyxor ETF FTSE All ShareUS iShares MSCI North AmericaEurope iShares MSCI Europe Ex UK Japan DB X-Trackers MSCI Japan ETFAsia iShares MSCI AC Far East Ex JapanEmerging Markets iShares MSCI Emerging Markets (Inc)Global DB X-Trackers FTSE All World Ex UKSpecialist ETFS All Commodities

ETFS AgricultureiShares Global InfrastructureLyxor ETF MSCI World Health Care

DefensiveCautious Income

Cautious Growth Balanced

Moderately Adventurous Adventurous

Fixed Interest / Money Markets 55.00% 42.00% 40.00% 26.00% 14.00% 6.00%

Property 12.00% 10.00% 10.00% 10.00% 4.00% 4.00%

UK Equities 8.00% 12.00% 10.00% 15.00% 15.00% 17.00%

US Equities 6.00% 0.00% 7.00% 10.00% 13.00% 14.00%

European Equities 6.00% 0.00% 7.00% 10.00% 12.00% 14.00%

Japanese Equities 3.00% 0.00% 4.00% 5.00% 5.00% 5.00%

Asia Pacific Equities 3.00% 4.00% 4.00% 6.00% 6.00% 7.00%

Emerging Markets Equities 3.00% 4.00% 4.00% 6.00% 10.00% 12.00%

Global Equities 4.00% 18.00% 10.00% 12.00% 12.00% 12.00%

Specialist Equities 0.00% 10.00% 4.00% 0.00% 9.00% 9.00%

Current Tactical Asset Allocation

The team

The portfolios are managed by Paul Berry and George Ladds

Final decisions on both the tactical asset allocation and investment choice are made through the investment committee

The investment committee also act as a risk management oversight function ensuring that the portfolios keep within the risk return parameters

All decisions, and meetings are documented and passed through to our network to act as a final safety check

The process is built such that should one member leave the team there would be no material impact of the process behind the portfolios

The Team

Mini Biography – Paul Berry

Director (and owner) of LWM Consultants Ltd, and Co-Portfolio Manager Over 20 years experience in financial planning and portfolio construction Fully qualified financial planner Investment Blogger

Mini Biography – George Ladds

Head of Operations (Research and Marketing) , and Co-Portfolio Manager Over 20 years experience in marketing, product development, fund research and portfolio

construction Diploma from Chartered Insurance Institute and BTEC in Business and Finance Investment and Financial Planning Blogger

The Team

The Investment Committee is made up of:

Paul Berry, Director George Ladds, Head of Operations Shaun Weinbren, Head of Finance Nicola McKissick, Head of Client Services

Committee notes are overseen and checked independently by Sense Network

Investment Committee

All members of the team are remunerated via a basic salary

Company performance bonuses are paid (profit share) but portfolio performance bonuses are not paid

The company encourages members of the team to invest in either the portfolios or some of the underlying investments so that the performance is aligned with investors

Remuneration

Facts and Figures

Assets managed in portfolios, over £40 million (as at 30 June 2014) – total assets under management over £80 million

Costs of Portfolios (including product charges, total expense ratios and adviser charging):

Facts and figures

DefensiveCautious Income Cautious Growth Balanced

Moderately Adventurous Adventurous

ISA / Personal 1.85% 1.74% 1.82% 1.76% 1.76% 1.73%Pension 2.14% 2.03% 2.11% 2.05% 2.06% 2.02%

Data stats 2014 2013 2012 2011 2010 2009Fund Manager Meetings 43 52 44 n/a n/a n/aPanel of funds 41 40 51 43 28 24New funds 9 8 17 19 9 n/aReplaced funds 8 19 9 4 5 n/a Holdings Defensive 20 18 23 23 n/a n/aCautious Income 16 13 15 15 28 23Cautious Growth 24 23 25 23 28 23Balanced 28 26 34 27 28 24Moderately Adventurous 28 28 34 29 28 24Adventurous 27 27 35 30 28 24 Turnover (%) Defensive 22.22% 47.83% 26.07% n/a n/a n/aCautious Income 0.00% 20.00% 26.67% 14.29% 17.39% n/aCautious Growth 34.78% 40.00% 26.07% 14.29% 17.39% n/aBalanced 24.62% 44.12% 14.81% 14.29% 20.08% n/aModerately Adventurous 28.57% 35.29% 10.34% 14.29% 20.08% n/aAdventurous 33.33% 48.57% 10.00% 14.29% 20.08% n/a

Facts and Figures

Performance1 January 2009 – 30 June 2014

Performance from 1 January 2009 to 30 June 2014. Source: Morningstar, on an bid to bid basis with net income reinvested.You should note that past performance is not a reliable indicator of future returns and the value of your investments can fall as well as rise. The total return

reflects performance without sales charges or the effects of taxation, but is adjusted to reflect all on-going fund expenses and assumes reinvestment of dividends and capital gains. If adjusted for sales charges and the effects of taxation, the performance quoted would be reduced.

Cautious Income

Cautious Growth

Balanced Moderately Adventurous

Adventurous

Performance 94.66% 89.97% 95.53% 96.62% 98.23%

Benchmark 40.31% 41.23% 45.22% 48.85% 48.96%

Outperformance 134.83% 118.21% 111.26% 97.79% 100.63%

Summary

LWM are driven by a passion and desire to deliver a service proposition where the client is central to the business

We believe in long term, life time financial planning where we can help the client and their family

We are passionate about identifying goals first and then building the solutions to deliver the goals

We see investments as a central part of this proposition, and believe in long term investments and not being distracted by the noise around us

Summary

You should note that past performance is not a reliable indicator of future returns and the value of your investments can fall as well as

rise. PLEASE NOTE YOUR CAPITAL AND / OR RETURNS ARE NOT

PROTECTED OR GUARANTEED

LWM Consultants Ltd is an appointed representative of Sense Network Limited, which is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales under Company Number 07408315. Registered Office: The Garden Suite, 23 Westfield

Park, Redland, Bristol, BS6 6LT