Henderson Rowe Tier 1 Investor Visa Fund Management
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The document provides information about Art Baluszynski and his role as Head of Fundamental Research at Henderson Rowe, an investment management firm with over £400 million assets under management. It also summarizes Henderson Rowe's investment approach, research process, the UK market and opportunities it presents, and its Tier 1 Investor Visa program overseen by John Whick. The Tier 1 program allows non-EU nationals to obtain UK residency by investing a minimum of £2-10 million for 1-5 years. Henderson Rowe provides portfolio management services tailored for the Tier 1 visa with a focus on direct stock/bond ownership and institutional-quality research.
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Henderson Rowe Tier 1 Investor Visa Fund Management
- 2. Art Baluszynski Head of Fundamental Research » 11 years experience with Henderson Rowe » Responsible for global equities and fixed income research » Member of Henderson Rowe and Rayliant investment committees » Previously at the Ministry of State Treasury of Poland (specializing in privatization of SOEs) » Graduate of Grenoble Ecole de Management » Additional coursework at Columbia University (Value Investing under Bruce Greenwald) 1
- 3. 2 About Us » Established in 2002 » Exclusively focused on investment management » 400+* million assets under management (16x organic increase since 2008 Financial Crisis) » Joined Rayliant Group in June 2018 * As of July 2019
- 4. Investment Approach » Portfolios designed to capture long term growth of UK equity markets » All investment decisions made in-house by experienced team » Active stock selection using range of valuation criteria and a proprietary fundamental stock selection model called R-Score » Range from low risk, highly diversified bond, equity and real asset portfolios to high risk, aggressive, concentrated equity portfolios » Rational and disciplined rebalancing process to counter market euphoria or depression 3
- 5. Quarterly CycleQuarterly Portfolio Research » The quant team gathers and sorts data on the global universe of stocks » The quant team with the support of the fundamental team develop and update the R-Score system » The R-Score system sorts stocks into deciles based on value, growth, quality & sentiment » The fundamental team studies top 2 deciles for potential investment targets » Selected stocks are incorporated into Henderson Rowe’s Tier 1 Model Portfolio Final selections for Tier 1 Portfolios 4
- 6. The UK Market » One of the oldest and best regulated markets in the world » High concentration of international companies with exposure to developing markets, resulting in international diversification United Kingdom North America Europe Rest of the World FTSE 100 Revenue by Region Energy FinancialsPersonal & Household Goods Health Care Basic Resources FTSE 100 by Sector 5Source: www.ishare.com , June 28 2019
- 7. FTSE All-Share Index PerformanceThe UK Market » Despite high exposure to Energy and Financials, the FTSE 100 delivered almost 10% per annum in returns, of which over 60% was delivered in form of dividends. » Due to the recent scare of global tariff wars as well as Brexit, the FTSE All-Share Index is trading at a 20% discount of its 10-year average and is currently offering a dividend yield of 4.7%. 156.60% 29.30% 28.40% -2.40% 10-Year 5-Year 3-Year 1-Year Offers an attractive entry point for patient, long-term investors looking for a diversified income strategy. 6 Source: Bloomberg June 28 2019
- 8. Institutional Quality, Bespoke Service Total Transparency of charging and actual assets owned Direct Ownership of UK shares to reflect high conviction “alpha” views Honest Communication from your personal investment manager Fair Costs Competitive price options to participate in long-term growth Data-driven Decisions to achieve long-term success 7
- 9. Tier 1 Investor Visa Programme
- 10. 9 John Whick, Chartered FCSI Senior Investment Manager & Head of Tier 1 Investor Visa Services » 12 years experience with Henderson Rowe » Chartered fellow with the Chartered Institute for Securities & Investment (CISI) » Established the Tier 1 Investor Visa offering at Henderson Rowe » Prior experience as a bond trader » Formerly taught economics
- 11. Tier 1 Investor Visa Overview » The Tier 1 Investor Visa gives a non-EU national the right to reside* in the UK where they have funds available to invest in the UK » Based on the quantum of investment, investors have three different paths to achieving ‘indefinite leave to remain’ » Investments must be in UK incorporated shares or corporate bonds » Initial capital must remain invested for the full term » Fees can be paid from the income generated £ 2 Million 1 Year 2 Years 3 Years 4 Years 5 Years Indefinite Leave to Remain 6 Years British Citizenship £ 5 Million 1 Year 2 Years 3 Years Indefinite Leave to Remain 4 Years 5 Years British Citizenship £ 10 Million 1 Year 2 Years Indefinite Leave to Remain 3 Years 4 years 5 Years British Citizenship 10 * Applications are subject to the requirements set out by the UK Home Office For illustrative purpose only
- 12. Why UK Tier 1 Investor Visa? The UK is a stable place to live with high standards of living Investor Visa holders are permitted (but not obligated) to work, study, or engage in business activities in the UK The UK offers a world-class education system The UK offers a favourable tax regime for wealthy individuals and non-UK nationals 11
- 13. Eligibility Requirements* » At least 18 years old » From outside the European Economic Area and Switzerland » A minimum of £2M to invest » Held in the name of the applicant, but can belong to either the applicant or the applicant’s husband, wife, unmarried or same-sex partner » Held in one or more regulated financial institutions » Free to spend (“disposable”) in the UK » Have a UK-regulated investment account ahead of application (opening a Henderson Rowe account would fulfil this requirement) 12 * Applicants must meet the anti-money laundering requirements set out by the UK regulations
- 14. A truly global firm, working for you London Investment Management authorised and regulated by the UK Financial Conduct Authority Hong Kong Investment Management Licensed and regulated by Securities & Futures Commission of Hong Kong Taipei Business Operations Beijing Research and Sales Los Angeles Investment Research Hangzhou Research, Trading and Operations 13 Note: Henderson Rowe is a division of Rayliant and is located in London. The other offices shown above are Rayliant's and its other subsidiaries'.
- 15. Experienced in Tier 1 Visa Portfolio Management Direct stock and bond ownership Henderson Rowe has a long track record investing directly in individual equity and fixed income securities, as required under the Tier 1 Investor Visa program Institutional-quality research Through partnership with Rayliant, we un- cover alpha through an institutional-quality quantitative model supplemented by deep-dive fundamental research Systematic investment process Client portfolios are managed according to a transparent, rules-based process backed by decades of academic research and designed around investor behavior Focused on client service In addition to achieving the best investment outcomes, Henderson Rowe is committed to providing the best experience for you and your family in the very long term 14
- 16. 15 Preparation » Anti Money Laundering (AML) » Tax Optimisation / Consideration » Lifestyle Goals
- 17. Consideration of Extreme Risks » Poor Quality AML » The “45-minute” Rule » Reinvestment Risk » Terminology / Definitions 16
- 18. Policies & Procedures Henderson Rowe is responsible for vetting and on-boarding new clients. To ensure new clients then have a seamless experience, Henderson Rowe is partnered with Platform Securities to provide streamlined custodial and trading services. KYC, AML, and Suitability Review The UK government and the FCA have extremely strict requirements regarding AML and investment suitability. Circumventing these rules creates significant risk to the firm. Therefore, Henderson Rowe must conclusively verify any new client’s identity and source of funds. The firm must also determine that its investment strategy is suitable for clients’ circumstances. The majority of Chinese Tier 1 clients who seek to invest at Henderson Rowe are rejected during the KYC process, and the primary basis for rejection relates to source of funds – if Henderson Rowe cannot verify how the client earned their money, it cannot be invested. The firm cannot overstate the importance of the KYC and AML process as it relates to the Tier 1 visa process. Government Pre-Approval Upon satisfying Henderson Rowe’s internal requirements, the client’s investment profile is submitted to the UK government for approval. Account Opening and Funding Upon approval by the UK government, Henderson Rowe will ask client’s to sign new account opening and funding paperwork. Clients should ensure in advance of government approval that funds are available for immediate transfer into a UK-domiciled bank account. Henderson Rowe may ask in advance for evidence of funds in a non-China domiciled bank account, as transfers out of China are often significantly delayed and can jeopardize account funding and Tier 1 status. Ongoing Management and Reporting Once an account is funded, Henderson Rowe will invest available cash according to its Tier 1 strategy and the clients unique circumstances. Performance analytics and reporting are made on a regular schedule, and clients may access relevant documents through an online portal available via Henderson Rowe’s website. Brokers and Execution Policy Consistent with MiFid II requirements, the firm’s custodian and broker, Platform Securities, has developed an Order Execution Policy, to which it monitors and adheres on an ongoing basis. The policy is made public on an annual basis. In addition, Platform Securities provides a separate report with information regarding each class of financial instrument executed by Platform Securities, its top five execution venues in terms of trading volumes, and where it has executed client orders in the preceding year, together with information on the quality of execution obtained. Prospective clients can access Platform Securities Order Execution Policy, along with its Execution Venues Report, by clicking here. UK Home Office Reporting Henderson Rowe is required to follow-up and engage with the UK Home Office after approximately 3 and 5 years from the inception of an investment to confirm its continues to meet the applicable criteria. The firm has an excellent track record with respect to these follow-ups. 17
- 19. Important Information This document is for the distribution of all retail clients and it constitutes a financial promotion under the Financial Services and Markets Act 2000 (“FSMA”). It is not intended for distribution to, or use by, any person or entity in any jurisdiction where such distribution would be unlawful and participation in the portfolio referred to herein shall not be offered or sold to any person where such sale would be unlawful. Any onward distribution of this factsheet is strictly prohibited. Henderson Rowe is a registered trading name of Henderson Rowe Limited, which is authorised and regulated by the Financial Conduct Authority under Firm Reference Number 401809. The value of investments and the income from them can go up as well as down and you may realise less than the sum invested. Some investments may be subject to sudden and large falls in value and you may realise a large loss equal to the amount invested. Past performance is not an indicator of future performance. If you invest in currencies other than Sterling, the exchange rates may also have an adverse effect on the value of your investment independent of the performance of the company. International businesses can have complex currency exposure. Nothing in this document constitutes investment, tax, legal or other advice by Henderson Rowe Limited. You should understand the risks associated with the investment strategy before making an investment decision to invest. Investors should be aware of the risks associated with data sources and quantitative processes used in our investment management process. Errors may exist in data acquired from third-party vendors, the construction of model portfolios, and in coding related to the index and portfolio construction process. Information contained in this fact sheet is based on analysis of data and information obtained from third parties. Henderson Rowe Limited has not independently verified the third-party information. The firm, its directors, employees, or any of its associates, may either have, or have had, a position, holding or material interest in the investments concerned or a related investment. 18
- 20. Henderson Rowe 8th Floor Berkeley Square House Berkeley Square London W1J 6BR Mayfair, London, UK +44 20 7907 2200 info@hendersonrowe.com hendersonrowe.com A Division of Rayliant Global Advisors
Editor's Notes
- Good afternoon ladies and gentlemen. Welcome to the Henderson Rowe Noah Tier 1 visa event. My name is Artur Baluszynski, I'm one of directors at Henderson Rowe and I have been with the company for almost 11 years. During my career I’ve worked in corporate finance and global equity and fixed income markets. At Henderson Rowe my focus has always been on researching undervalued, high quality global businesses across the whole capital structure and on building our client’s portfolios from scratch with very little third party input. This allowed us to understand and manage the underlying risk better than most of our peers.
- Good afternoon ladies and gentlemen. Welcome to the Henderson Rowe Noah Tier 1 visa event. My name is Artur Baluszynski, I'm one of directors at Henderson Rowe and I have been with the company for almost 11 years. During my career I’ve worked in corporate finance and global equity and fixed income markets. At Henderson Rowe my focus has always been on researching undervalued, high quality global businesses across the whole capital structure and on building our client’s portfolios from scratch with very little third party input. I believe this approach allowed us to understand and manage the underlying risk better than most of our peers.
- The Venue we are in today is called The Royal Automobile Club and is one of the oldest private members clubs in Britain. It was founded in 1897 as the Automobile Club of Great Britain but later changed its name to the Royal Automobile Club after King Edward VII’s joined as a member. The Duke of Westminster and Duke of Kent were also members. The Royal Automobile Club is a perfect venue for today’s event as it represents a mix of English traditional values and technological progress. This is exactly how we approach investing for our clients. Traditional relationships combined with the latest most, robust research methods. Investing in equity and fixed income markets is what we do best at Henderson Rowe, we don’t specialise in tax advice or sell expensive insurance products. This common sense approach allowed us to grow sixteen fold since the global financial crisis. While most of our competitors were losing AUM we managed to grow on the back of our straightforward offering. Last year’s acquisition by Rayliant allowed us to not only to upgrade our investment capabilities but also to reach out to investor’s like yourselves in an effort to deliver better solutions for your clients.
- Our Investment approach is a straightforward one. Our portfolios are designed to capture and compound long term growth of the global economy. We don’t outsource our research, we do everything in-house, and this means we earn every penny of fees charged to our clients. This also means that we know what we hold in our client’s portfolios and are able to resist selling during market panics or buying overvalued assets. We pick stocks using our proprietary stock selection system to create model portfolios which we then rebalance according to our asset allocation strategy. Our clients are able to choose portfolios along the risk spectrum starting from highly concentrated equity-only portfolios to more conservative fixed income focused solutions.
- Lets have a look how we design and implement Tier 1 portfolios. Our R-Score screen developed together with Rayliant’s Quant team ranks the UK stock universe into deciles based on Value, Growth, Quality and Sentiment Scores. Henderson Rowe fundamental analysts then select a short list of stocks from top two deciles. Portfolios are updated and if, necessary rebalanced quarterly. Position size is limited to 3% and sector exposure to 25% of the total value of the portfolio. For Fixed Income exposure we screen the UK corporate bond market for investment grade, liquid bonds which offer attractive yield within reasonable spread and duration constraints.
- As most of you know, The Tier 1 Visa portfolios can only invest in the UK Market. While some might not see it as an attractive option let me explain why we disagree. The UK market is one of the oldest and best regulated markets in the world. It’s also a home to the world’s best known businesses and brands. It offers exposure to mature, dividend paying industries as well as high growth tech and software businesses. As you can see from the slide, the revenue and sector breakdown are fairly well diversified. This means that when you are buying UK market you are actually buying a spread of revenues and cash flows from all over the globe. This should continue post Brexit as for over 100 years global business community have flocked to do business in Anglo Saxon countries based on English legal system. It simply offers unmatched predictability and stability.
- Despite the Brexit vote, and some exposure to basic resources sector the UK market has still managed to deliver almost 10% return per annum over the last decade. Pound Sterling has been and still is one of the most liquid and stable currencies in the world. Due to Brexit uncertainty FTSE All-Share is now trading at 20% discount to its 10-year average, an attractive valuation for long term investors.
- The famous Charlie Munger, Warren’s Buffet business partner, once said “ Investing is supposed to be simple, not easy”. That’s also one of our core believes. Keeping it simple means avoiding complicated structured products, lock-ins, expensive third-party products or promising performance. That is us in a nutshell. Once again thank you very much for your attention and I hope this is a beginning of a business relationship that rip long-term benefits for your clients, yourself and Henderson Rowe. I will now pass it over to my colleague John Whick, who developed our Tier 1 Visa business and who has an extensive experience working with international clients on behalf of Henderson Rowe. And please enjoy the rest of your lunch.
- Thankyou Artur and good afternoon ladies and gentlemen. My name is John Whick and it’s a pleasure for me to speak to you today at this grand location of the Royal Automobile Club. I established the Tier 1 Investor Visa service at Henderson Rowe soon after joining the firm 12 years ago. Now to begin with I’d like to give you an overview of the Tier 1 Investor visa and can conveniently turn to the slides above.
- The Tier 1 Investor Visa provides wealthy individuals with the means to achieve indefinite leave to remain and ultimately a UK passport after an additional year. Depending on the amount you invest the time taken to achieve ILR does vary as can be seen above. The investment must be in UK incorporated companies by way of share capital or loan capital. As you have heard from Artur this is something we are highly experienced at dealing with having been a UK equity specialist for over 15 years.
- There are many benefits to The Tier 1 Investor visa and some of the key aspects are highlighted here. In my experience it is the stability and the quality of the education system that are primary among the factors that attract Chinese clients to the UK.
- As this slide highlights there are a number of requirements that are required to be eligible for the UK Tier 1 Visa. The main hurdle will clearly be the £2m investment amount and in actual fact we always recommend that the client invests £2.1m . This provides a buffer to account for any transaction costs and means that the client doesn’t appear to dip below the minimum due to accrued interest on any bonds they might purchase. Its also important to note that in the context of the Tier 1 rules Henderson Rowe is considered a ‘bank’ . We can therefore open an account for the client and provide the necessary documentation for the account opening process.
- So as Artur pointed out, being part of Rayliant Group changes the landscape for Henderson Rowe dramatically. In the context of research capability this is clear but also given our global presence, experience in the tier 1 space and focus on Asia we now have the resources to be the leaders in this field. We do have representatives around the world and this gives us a huge advantage in terms of having the ability to put clients in front of representatives of RGA if that is deemed necessary. This combined with an exemplary Tier 1 track record means that we aim to offer a service that is second to none.
- This high level of service is built on the research quality that RGA brings to the table and which is combined with the Tier 1 expertise we have in-house at Henderson Rowe.
- Preparation: Anti Money Laundering In preparing to undertake the Tier 1 route to settlement in the UK, focusing on AML aspects from the outset is key. Anti-Money Laundering is for us the major hurdle and the one at which potential clients do fall short in some cases. This is where working along side yourselves we as a team will really be able to strengthen the quality of the AML we do and I suspect open the Tier 1 route to more potential clients. Anti-money laundering is now a central requirement to allow the application for the visa and something we have always taken pride in covering efficiently but stringently. Four areas are covered, and I’ll list these in order of complexity: Proof of ID Proof of Address Source of Wealth Source of Funds The later 2 of these are the most challenging and cover the general ‘wealth’ of the client and then the specific funds that will end up being used for the Tier 1 investment. It is important for you to know that as an investment House in the UK we have to understand where these funds emanated whether that be from something such as the sale of property, the accumulation of salary or profits from other investments. In order to prove this we have to see a clear paper trail from that source through every entity/ account until it arrives with us. In this context from the moment a client decides to go on this Tier 1 journey we strongly advise that clients / advisors start to accumulate necessary documentation and consider which funds they will choose to use and what route they will take to getting those funds into the UK. We couldn’t be happier to be working along side people on the ground in China given that you will have a better ability to translate the requirements and explain the central role of AML to your clients. In preparation for the Tier 1 journey, talking with your clients and understanding where funds will come from is key. You will be incredibly valuable to them if you can ascertain where is the best source for them to send money from into the UK and indeed prevent costly errors which can include raising funds from the sale of assets which then might not be allowed to be used due to AML concerns. In most cases funds that are used by Chinese clients come from Hong Kong due to the exchange controls that are in place in mainland China. Simply being aware of this and being able to advise from the outset regarding what sources of a clients wealth are best suited for use in the Tier 1 visa application will mean the whole process will move far more smoothly. In this preparation stage therefore Noah offers a great opportunity for RGA and Henderson Rowe to both work more effectively and increase the quality of the AML that we do. This for us is an exciting prospect. Tax Optimising Another element in the preparation stage is making sure that the client has a thorough understanding of tax implications and how they will deal with the tax liabilities they will face in the UK. You as advisers are much better placed than I to provide your clients with an insight into this and again this may have implications on what funds are used and where they are sent from if a client has different options for funding their visa. We as investment managers will always flag this up to clients once we meet them however it is clear that the earlier that they can get this advice on taxation matters the better. Lifestyle Goals In terms of preparation one final area I think it is prudent to raise is that of lifestyle goals. Gone are the days when one family member could apply and then others could come as dependents without time limit stipulations regarding how much time they had to spend in the UK. All family members now must stay for the requisite half year period so in making preparations for that journey we have seen it as key that, particularly business owners, have plans to manage life while absent from their Home country for long periods. No doubt this is an area that you can help your clients and I can’t underline the importance of these ‘time in the UK’ requirements for the Home Office. One of the things that is highly advisable is that clients keep a detailed diary of their time in and out of the UK particularly if they expect to be close to the 180 day minimum.
- Consideration and Understanding of the Extreme risks The other area that is crucial to take into account when undertaking the Tier 1 investor journey is considering the elements of the system that lead to extreme levels of risk for the client. Having an appreciation for these factors means clients will adapt their behaviour with regards to some of the aspects mentioned above and the chances of things going wrong are greatly reduced. Likewise, for you as an advisor having an understanding of these allows you to demonstrate real knowledge of the area and advise clients well. To me advising a client well means having the ability to steer the client in a direction which is in their best interest when to the client they might on first inspection feel that what you are suggesting is superfluous. Poor Quality AML In the process of opening an account AML is often a challenge. However having individuals such as yourself on hand with a detailed knowledge of the clients will hugely strengthen our ability to deal with this. As you know for Chinese clients records can be scarce, and it can be hard to collect all of the information that is needed. However, as recent exposes in the British press have demonstrated all too vividly, getting the AML correct is absolutely vital. Worst case scenarios of failing to do this properly and opening an account prematurely include investigation by our regulator, the FCA, and the closure of the clients account. In this case the client’s visa is put in real jeopardy given that they will, no doubt, find it much harder if not impossible to open a new account elsewhere. We are proud to have a stringent but fair approach to the AML regulations and we feel this is vital to give the client ultimate security on their journey to ILR. Working as a team I truly believe will set us apart in this field and mean that we can provide clients with rock solid insurance against the risks poor AML exposes them to. 45 Minutes Rule An interesting statistic in the context of the Home Office approval process is that when documents are submitted for extension or ratification, the case worker who undertakes this task will have an average of just 45 mins to make a decision. The case worker will have a file with multiple documents to assess in this short time period during which a number of key parameters have to be checked and ratified. In this context it is absolutely key that the nature of the investment sticks as closely to the investments described as allowable in the Home Office guidance. Anything that is slightly esoteric, structured in a manner that raises questions about its veracity or is in any way complex, vastly increases the chances that, at best, the case worker delays the approval of the case . In a worst-case scenario this could lead to an outright rejection of the visa and hence we suggest it is important to avoid those ‘products’ as discussed above which in my experience seem to come and go year in year out. Keep it simple and stick to tried and tested methods which the Home Office recognise and approve of. Reinvestment Risk One of the most common mistakes that is made with the Tier 1 investor visa is the failure to keep the funds invested. This may seem like a very simple task but often due to the lack of oversight at our larger competitors, we have seen many instances when bonds have matured or stock has been sold and the portfolios have sat in cash. If this goes beyond 3 months the clients visa will be rejected. Its that simple. We will keep all of our partner advisors in the loop with regards to the portfolio valuations such that there are two sets of eyes watching guarding against this eventuality. We watch our portfolios daily in house and keep track on imminent bond maturity events. We have never fallen foul of this reinvestment risk but have seen and heard of many cases across this industry. Terminology In the investment world terminology can be used loosely and in the context of the Tier 1 investor visa this opens clients up to high levels of risk. Whether it is understanding the distinction between UK incorporated and UK listed entities or simply questioning the accuracy of the designations of financial instruments, fully appreciating terminology is key to avoiding disastrous outcomes for clients. One of the worst examples of this regards the usage of the term ‘bond’. Many firms in the UK offer savings ‘bonds’ that are designated as, for example, ‘Barclays Saving Bond’. These ‘bonds’ are however cash instruments and not loan capital as defined in Home Office guidance. I have however seen an example where the bank itself told the client that this ‘bond’ instrument met the criteria of the Home Office only for the visa to be completely rejected at the extension stage. This was 3 wasted years for the client on the basis of assurances given by the financial institution and I believe the client could not subsequently afford to reapply due to higher investment minimums. In this context it is therefore crucial that any Investment team is well versed in the terminology and definitions outlined by the Home Office. Once misinterpretation is embedded in the portfolio then the outcome for the client can easily be the end of their relocation aims. That brings me to the end of the presentation and thankyou for listening to me today. I hope this framework of the technical aspects , preparation and consideration of extreme risks on the Tier 1 journey provides you and your clients with a more nuanced understanding of the Tier 1 visa and a greater chance of them reaching their aims. I am happy to do my best to take any questions you might have.