Ashcourt Rowan Perspectives produced for River. I was asked to take a look at the existing design and this is the end result. Cleaner and using one illustrator throughout, Neil Webb, it helped the pace and flow of a relatively small magazine. Client decided against the cover, but I really liked it.

1. spring 2013
Taking
sTockwHy global turbulence makes
a portfolio review a must
Finding income
How to boost
revenue fromyour
investments
Family finance
wHy tHe bank
of mum and dad
is always open
Technology
tHe latest
breaktHrougHs
to alter How
we live
and work
10 ways to
keep your tax
bill down

2. PERSPECTIVES 3
t: 0800 054 6797 email: perspectives@ashcourtrowan.com w w w. ashcourtrowan.com
Contents
perspectives is published biannually by ashcourt rowan plc exclusively for its clients by the river Group. if you wish to discuss any of the products or services mentioned
in this publication then please contact your ashcourt rowan adviser or investment manaGer. the opinions and subjects discussed in this publication are for editorial
purposes only and do not constitute financial advice. no director or employee of ashcourt rowan plc accepts liability for any direct or consequential loss arisinG
from the use of this document or its contents. the opinions expressed in this maGazine are not necessarily the views held throuGhout ashcourt rowan plc.
4
G lo b a l i n v e s t m e n t
by stephen walker
we are living in interesting times
– which is why an annual
portfolio review is more
important than ever
7
a lo c a l a p p r oac h
where to find us – a guide
to ashcourt rowan’s offices
around the Uk
8
10 ta x- p l a n n i n G t i p s
by chris williams
making the most of tax-efficient
savings is a priority for every
investor… but are there ways you
may be missing out?
10
t h e b a n k o f m u m & da d
by chris williams
planning is the key to providing
financial help for your children
1 2
t h e pat h to i n co m e
by stephen walker
with interest rates stuck on ‘low’
where should investors look now?
14
d o p e n s i o n s s t i l l
h av e w h at i t ta k e s ?
a reputation for being costly and
unreliable means many are
giving pensions a wide berth.
but are they right?
16
t e c h n o lo G y:
t h e f i n a l f r o n t i e r
by stephen walker
a look at the developments that
are changing the way we live
and work
18
m e e t t h e t e a m
David esfandi’s investment
research team is an excellent
blend of specialists
spring 2013
p8
p14
p4
p16

3. PERSPECTIVES4
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wordssandraHaurant.pHotograpHtBC
A chAnging world
wHy an annual portfolio review is so important

4. PERSPECTIVES 5
t: 0800 054 6797 email: perspectives@ashcourtrowan.com w w w. ashcourtrowan.com
ast summer, with the global
economy in meltdown and the
FTSE 100 plunging towards
5000, optimists were in short
supply. How quickly things change –
less than one year later, the
investment world looks rather
different. The future looks that little
bit brighter, at least where stock
markets are concerned.
Several factors combined to
improve the investment market’s
mood. European Central Bank
President Mario Draghi can certainly
take some of the credit, after his
pledge in July 2012 to do “whatever
it takes” to save the euro. Sentiment
was further boosted by yet more
quantitative easing (QE) from the
US Federal Reserve and the Bank
of England, and looser monetary
policy in many other countries,
notably China.
As a result, the FTSE 100
benchmark index ended 2012
nudging 6000 and leapt another
6.4% in January, its best start to a
year since 1989. Compare that to
the doldrums of March 2009, when
the financial markets plumbed the
depths. Back then, the FTSE had
dropped by 40% to around 3500.
It felt like the end of the world at the
time – but the world is now a very
different place.
While it is too early to tell where
2013 will take us, the need to keep
the make up of our clients’ investment
portfolios under close watch has
never been more important. Equities
may look favourably priced compared
with other assets now, but this
dynamic can change quickly in
response to the direction of interest
rates and government “stimulus”.
p u t t H at C a s H to wo r k
In the wake of the crisis, many people
chose the relative safety of cash,
avoiding exposure to the turbulence
of the markets. But investors who
have failed to review their portfolios
since those dark days could now be
losing out significantly. For those who
sat tight after the financial crisis, it
might be time to give their portfolios
a dust down and a shake up.
For one thing, cash carries its own
risks. Savings rates are pitifully low
and there is little sign that they will
rise any time soon. The Bank of
England could easily hold base rates
at 0.5% for another four years or
more, and relatively high inflation
means that anybody who leaves too
much of their wealth on deposit will
see the value of their money fall in
real terms, year after year.
So where next for investors? Of
course, there is no single solution, but
moving with the times is important if
they are to harness the current power
of the market. The crisis certainly
isn’t over yet and stock markets
remain volatile, but with the right
advice and guidance, there are
certainly some very solid
opportunities for today’s investor.
t H e way a H e a d
While markets may take a breather
following their recent exertions,
there could be more excitement to
come, according to David Esfandi,
managing director at Ashcourt
Rowan Asset Management. The
International Monetary Fund (IMF)
predicts that the global economy will
grow by 3.5% this year and this
could bring even greater upward
swings, he says.
“If we get that kind of growth,
business will really get to work,
boosting capital expenditure, seeking
mergers and acquisitions, growing
earnings, generating more cash, and
paying higher dividends to investors.
All this could drive markets higher.”
Consequently, there is arguably no
time like the present for considering
shifting portfolios towards stocks and
shares, says David. “The global
economy isn’t going to steamroller
ahead – markets will remain volatile,
with a lot of ups and downs. Yet some
funds and stocks will outperform,
which gives us plenty of scope to
generate growth.”
Equities remain the best value on
a relative basis given the current
levels of interest rates. This is fertile
ground for adding value by
identifying the right stocks - there
will be winners and losers and
effective research will help keep us on
the right side of the fence.
Indeed, he is hopeful that there is
good scope to outperform benchmarks
this year across our portfolios of
direct equities and funds.
g e t t i n g t H e f i t r i g H t
Naturally, the style of investment
portfolio must always suit the needs,
aims and risk profile of the individual
– which is why regularly reassessing
and reviewing investments with
investment managers is vital.
“Our primary aim is to protect the
value of clients’ money. The economy
could still find itself in a dark place
and we’ve positioned our portfolios to
survive that, by diversifying,” he says.
There are many possibilities for
growth in the current climate, and,
says David, a fall in share prices
l
Our primary aim is
to protect our clients’
investments. We have
positioned our
portfolios to survive
by diversifying

5. PERSPECTIVES8
10 ta x- pl a n n i n g t i p s
voiding paying
unnecessary tax
should be as simple as
working through a
checklist of priorities. However, for
many people, an interwoven array
of financial products and legal
thresholds can make it hard to know
where to begin. “Products and
allowances come loaded with
jargon,” says Chris Williams, chief
executive officer of financial
planning at Ashcourt Rowan. “And,
as they go through life, people pick
up investments, policies and pensions
without a co-ordinated financial
plan. They need someone to set out
the order in which to address them.
“Most people have a ‘lightbulb’
moment when they realise they need
to sort out inheritance and income
tax,” he says, “and the earlier they
start to plan, the easier that will be.”
Chris’s tips should make tax
savings simpler still.
1
Pa rt n e r s i n ta x
Individuals have an
untaxed inheritance tax
threshold of £325,000. If you’re
married or in a civil partnership,
you share a combined allowance
of £650,000, and will inherit your
deceased partner’s allowance. This
means you need to keep a clear and
accurate record to demonstrate that
they didn’t use their threshold when
they died. Making a will is also vital.
2
G i v e i t away
An individual can gift
£3,000 a year without tax
implications. Any amount beyond
that will remain untaxed as long as
the giver lives for seven years after
while tax efficiency is a Priority for most investors, in reality many
PeoPle miss out on siGnificant Potential savinGs. PeneloPe Rance talks to
ashcourt rowan’s chris williams
illustrationneilwebb
income after living expenses.
This can cover income from
pensions and investments, but
you need to demonstrate that the
income is more than you need to
live on. While this can be done
at any age, it makes sense to
wait until you know you have
sufficient funds to live on.
4
t h i n k t r u s t s
Most people would
rather give away their
money than have their children pay
inheritance tax. However, the
concern is that they don’t run out of
funds in the process. The solution
could be to put the money in a trust
where you retain a right to any
income. Ashcourt Rowan can advise
on the right kind of trust to ensure
financial security.
5
t h e b u s i n e s s
Business property relief can
be useful for business owners
as they can pass on their wealth
without being taxed. Private clients
can take advantage of this, too, by
investing in unlisted or AIM-listed
companies (those listed on what was
formerly known as the alternative
investment market). After two years,
the investment is exempt from
inheritance tax. However, these
investments can be relatively high
risk and that the value of your capital
can go down as well as up.
6
b e c h a r i ta b l e
Charitable gifts are exempt
from tax, as are donations
to political parties. This can be useful
for not paying tax on any money over
the inheritance tax threshold.
the gift, otherwise inheritance tax
may be payable. Plan early and give
on a regular basis, taking advantage
of annual allowances and exempt
transfers so your liability remains
manageable. Property must be given
as a full gift – you can’t continue to
live there once you’ve made the gift.
Also be aware that buying another
property creates a new liability.
3
e x t r a i n co m e
The income over normal
expenditure allowance lets
individuals give away any surplus
most people have a
lightbulb moment when
they realise they need
to sort out inheritance
and income tax
a
t: 0800 054 6797 email: PersPectives@ashcourtrowan.com w w w. ashcouRtRowan.com

6. PERSPECTIVES12
t: 0800 054 6797 email: perspectives@ashcourtrowan.com w w w. ashcourtrowan.com
The paTh To income
ooking for income is a difficult
game these days. The Bank of
England base rate is nearly at
rock bottom and there are no
signs that this will change soon.
Inflation is high enough to make it
difficult for taxpayers to earn
sufficient interest to actually make any
money from their savings.
The impact of low interest rates is
certainly harsh for those with money
in fixed-rate accounts that are coming
to a close, taking them away from a
relatively high rate of interest and into
returns that are far less appealing.
After all, the banks are not exactly
going hell for leather to get savers
through their doors. “Banks don’t
offer high savings rates out of the
goodness of their hearts,” says
Stephen Walker, head of
investment research at
Ashcourt Rowan.
“They do so to
bolster funding
for lending.”
And currently,
he says, their
need for that
funding has
diminished.
Firstly,
consumer
appetite for
borrowing has
reduced, with
more and more
people working on
paying off debts
rather than increasing
borrowing. And the
government’s Funding for
Lending scheme, aimed at
encouraging banks to lend to
businesses and consumers, means
Interest rates are low, lIvIng costs are rIsIng, and fIndIng InflatIon-
beatIng savIngs Is IncreasIngly tough. so where should Investors turn
now If they are searchIng for…
they’d ever get their
money back.
“People have realised
that just going to the
banks with the highest rates is
not the risk-free option they once
thought it was,” says Stephen.
But while getting income from your
money isn’t easy, it’s not all doom and
gloom. “People who have been
religiously putting money away in
individual savings accounts (ISAs)
over the years will now have access to
tax-free withdrawals,” he explains.
Nonetheless, generating income
is undoubtedly tough, and
with the cost of
living
banks have easier and cheaper access
to funds than they have had in the
past, leaving them less inclined to call
on savers to boost their coffers.
s av v y s av e r s
Savers, too, are wiser than they used
to be. The days when people headed
straight for the highest rates on the
‘best buy’ tables are now gone. Too
many people had their
fingers burned when
table-topping
accounts from
Icelandic banks, among
others, left them
wondering
whether
l
wordssandrahaurant.IllustratIonneIlwebb.photographlouIemunro-mIchell

7. PERSPECTIVES 13
t: 0800 054 6797 email: perspectives@ashcourtrowan.com w w w. ashcourtrowan.com
rising and people needing to keep
pace with inflation, investing for
income has never been more relevant.
So, if old-fashioned cash savings
cannot rise to the occasion, is there
anything that can?
I n co m e h u n t e r s
“People are increasingly being driven
out of banks and into investing,” says
Stephen. “But that means taking
certain risks that less-experienced
investors are not used to taking and
often do not fully appreciate.”
One of the first natural ports of call
is bonds, where the investor effectively
lends money to a government or
company in return for interest.
“There has been relatively high
demand for bond funds from investors
in recent years,” says Stephen. “But
the challenge here is that there are
very low yields on government bonds.”
High-quality gilts, as UK
government bonds are known, have
yields paying perhaps 2% or 3%, and
are not tax efficient, warns Stephen.
For higher returns, Stephen believes
that corporate bonds could play an
important role. “We think high-yield
corporate bonds are quite attractive,”
he says. “If you hold on to them until
maturity, you could potentially be
looking at expected returns of 5% to
6%. The outlook for these is fairly
positive – and while we have concerns
about the economic backdrop, the
default risks remain low in our view.”
Plus, if a company goes into
liquidation, bondholders will be
higher on the list of creditors than
shareholders, and are likely to get
back more of their investment.
But that’s not to say that UK shares
should be ignored when investing
for income. “Equity
income can
provide a decent income stream that
should grow over time,” says Stephen.
“Major blue-chip companies will aim
to increase their dividends over time.”
It is important to bear in mind,
though, that these dividends are in no
way guaranteed, and income can be
affected should they cease to be paid.
Another potential downside is that,
as shareholders, equity investors take
a greater capital risk than bond
investors. With bonds, at the end of
a set period and in the absence of
default, you will get your capital back.
With shares, there is no end point and
no such promise. Realising your
capital requires you to sell the shares
and prices can go down as well as up.
There are other areas, though, that
could be attractive to income seekers.
co m m e r c I a l p r o p e rt y
In spite of a number of potential
disadvantages, this sector could prove
profitable. “The fundamentals may
not appear to be great as the
opportunity for capital growth is
limited at present, and those that have
a lot of exposure to retail property on
the high street have issues,” says
Stephen. “But many of the funds that
invest in commercial property have an
orientation towards offices, logistics or
shopping centres. There is reasonable
rental yield to be had and over time it
is hoped that this will grow in
line with inflation.
Capital value
should also increase. It depends on the
UK’s economic outcome, and you
might not get rich quick, but it is
perfectly possible that in the long
term, these funds will do well.”
thInk outsIde the box
But while investors traditionally look
for income in the form of interest or
yield, it can be useful to look
elsewhere. “There is no need for this
to be income rather than capital
growth,” says Stephen. “Investors can
withdraw from capital and a balanced
approach that seeks both income and
capital growth may be worth
considering if only because, in many
cases, tax efficiency will be improved.”
Interest rates also look set to stay
low for the foreseeable future, so
income investors increasingly need a
solid plan in order to reach their goals.
“There is not one solution,” says
Stephen, “but a mix of these elements
designed to achieve both yield and
growth, with income increasing going
forward and a capital value that is
kept relatively stable goes a long way
to achieving what many people need.”
Ashcourt Rowan has a number of
lower-risk strategies that could be a
good starting point for those looking
to invest for the first time. Please
contact one of our financial planners
if you are interested in receiving
advice on your investments. xxxxx
xxxxxxxxxxxxxxxxx
Choosing inappropriate or unsuitable
investments could put your capital at greater
risk than you are willing to accept. The value
of your investments may fall as well as rise.
High yield corporate bonds can carry a higher
risk of capital loss than other fixed interest
stocks. Always speak to your adviser before
making investment decisions.
high-yield corporate
bonds are attractive.
hold onto them to
maturity and you
could be looking at
returns of 5% to 6%
Toni
meadows
chief Investment
officer

8. 2
PERSPECTIVES16
t: 0800 054 6797 email: perspectives@ashcourtrowan.com w w w. ashcourtrowan.com
with the advent of
online and now
mobile banking, many
of us rarely venture
into a physical branch
technological advances have created countless challenges and
opportunities for businesses and investors. stephen walker looks at the
developments that are altering the way we live and work
he last 40
years have
seen a major
revolution in
the way people around
the world work, plan,
communicate and shop.
A step change in the
capability of technology
and the continued
innovation of products,
many of which seem
unnecessary but quickly
become part of daily life,
have made this possible.
The influence of
technology is everywhere
and has impacted all industries.
Apple, Microsoft, IBM, Google and
Samsung hog the headlines, but
technological advances have had
important implications for the oil
majors such as ExxonMobil,
PetroChina and Chevron, which
exploit resources that were
unobtainable just a few decades ago.
Manufacturing, too, has seen
dramatic changes. Thanks to
advances in robotics by Japanese
companies, many manufacturers are
able to automate large amounts of
their supply chain, immeasurably
improving quality, reliability,
productivity and scalability.
Financial services have changed
beyond recognition. With the advent
of online and now mobile banking,
many of us rarely venture into a bank.
Global companies can arrange
video conference calls between staff
separated by huge distances, allowing
them to manage sprawling operations.
The mobile phone means that
remote villages is
having a transformative
impact on economic
development, too.
t h e lo s e r s
In most areas,
incumbents have
adapted to these
changes and often
prospered, but the
relative decline of
companies such as
Sony, Eastman Kodak
and Nokia should be
enough to show that
technology companies
can also get left behind.
However, the area that has
encountered the most challenges is
retail, particularly in the UK, with
the traditional high street suffering.
The arrival of online shopping has
divided the retail world in three:
those such as Amazon that are online
only; those that have developed a
powerful online presence alongside
physical stores, for example Tesco
and Next, and those that are wedded
to their physical locations.
The most recent crop of retailers
to go out of business (HMV, Comet,
Jessops and Blockbuster), share a
common theme – they don’t offer
anything unique and what they sell
changes quickly. From a cost point of
view, they can’t compete with virtual
rivals with lower overheads,
something that handicapped Comet
and Jessops.
A bigger problem for HMV and
Blockbuster was a failure to adapt to
changing trends. Both were iconic
people are rarely out of touch with
one another, which has its downsides
as anyone trying to get away from the
office for a relaxing holiday will tell
you. However, on balance they are
surely a positive force.
g lo b a l d e v e lo p m e n t
Mobile technology is also changing
developing economies, enabling them
to bypass the time and cost involved
in instaling a nationwide fixed-line
telecoms network and instead jump
straight to mobile.
Bringing banking capabilities to
//:Technology://
The Final FronTier
t
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9. PERSPECTIVES 17
t: 0800 054 6797 email: perspectives@ashcourtrowan.com w w w. ashcourtrowan.com
brands and could have been at the
forefront of changing habits. Instead,
consumers use iTunes or Amazon to
download their favourite songs
instantly, and services such as Netflix
to instantly stream films or TV shows.
In an attempt to avoid
cannibalising their incumbent
business, they resisted change and
ultimately destroyed themselves.
i m p o s s i b l e to r e s i s t
If there is one lesson to learn from all
of this, it is that companies cannot
resist change; the successful ones
embrace it. Consumers are under
financial pressure but they are still
spending, and rather than curse the
economic backdrop, retailers should
look at themselves.
In the UK, online-only companies
such as ASOS and Ocado have
emerged while others have married
the online and physical worlds
successfully. There is still room for
good businesses such as Costa Coffee
(owned by Whitbread) but what is
required is a clear understanding by
management of what they are
offering, whether who they are
competing with and whether they are
offering anything unique.
Technological changes have shrunk
the world, bringing communities
closer together. Over time, they
should play a key role in increasing
prosperity and enabling more rapid
development for emerging economies.
From an investment point of view,
those who can leverage technological
change to their benefit stand a good
chance of delivering strong returns,
and fund managers who appreciate
this have a better chance of delivering
for their investors over time.
XXXXXXXXXXX XXXXXXX
t h e pac e o f c h a n g e
gordon moore, a
founder of
microchip giant intel,
famously predicted
in a 1965 paper that
the number of
transistors on an
integrated circuit
would double
roughly every two
years. without
worrying too much
about the
technicalities,
increasing the
number of
transistors is the
main driver of the
increased power we
have witnessed.
‘moore’s law,’ as it
became known, has
persisted longer
than the decade he
imagined and
explains a 1,000-fold
increase in 40 years
as shown on the
chart, below.
as an example, the
original 2007 iphone
was 100 times more
powerful than a
‘portable’ computer
from 1982, weighed
1/100th
as much, is
1/500th
the size and,
adjusted for inflation,
cost 1/10th
as much.
weight
size
cost
1
/100
1
/500
1
/10
1982 PorTable
2007 iPhone
vs
m o o r e ’ s l aw
1,000
10,000
100,000
1,000,000
10,000,000
100,000,000
1,000,000,000
10,000,000,000
1970 2010
nooftransistors
stephen Walker,
head of market and
bespoke portfolio strategy
intelitanium2processor
intelitaniumprocessor
intelpentium4processor
intelpentiumiiiprocessor
intelpentiumiiprocessor
intelpentiumprocessor
Dualcoreintelitanium2processor
intel486processor
intel386processor
286
8086
8080
8008
4004