1. The Little Book of TCF
Ten things everyone should know about investing

2. About TCF Investment
Who we are
We are a fund management business based in Kent (because it is much
cheaper than the City of London). We are wholly focused on delivering
low cost, multi-asset investment products to UK advisers and their clients.
Our clients
Our clients are all types of investors: large and small, seeking transparent,
consistent and fairly priced funds for their ISAs, pensions and investments.
Our people
We have used our significant and extensive experience to challenge the
rules of fund management to provide smart, low cost simple solutions
to today’s investment challenges.
Our difference
• We invest our own savings in our funds.
• Our funds get cheaper as they grow – because that’s fairer.
• Low cost, safe, and transparent are our watchwords.
• We never forget whose money we are looking after.

3. Foreword
Investment is a scary subject to many people.
It involves your hard earned savings and has
risk and complexity. But there are a number
of tips that can help everyone to make
smarter investments. We use them when
we run our Total Clarity funds.
At TCF Investment we invest money but do not give individual
financial advice, so make sure you speak to your own financial
adviser to discuss your specific circumstances.
However, please use these top tips to guide you when deciding
what to invest in and they should help to ensure you are on the
right path.
And, as a little endorsement we have added some quotes from
some recognised industry names, Nobel Prize winners and a cat!

4. Get the big rocks in place first
Deciding the amount to invest between different types of
assets, such as equities and bonds, is far more important
1
Top Tip
to your long-term return than deciding on which share or
individual fund to buy. This is called asset allocation.
This is the foundation of successful long-term investing.
important!
“The asset allocation decision is by far the most important
factor in determining long term returns.”
Sandler Review: Medium and Long-Term Retail Savings in the UK – July 2002

5. Stay off the road to nowhere
Start with the end in mind. Unless you know what you are
aiming at, how will you know whether you are on track?
2
Top Tip
It is no different with investment. It is important to
understand your goals, the amount of risk you are
prepared to take (how big the ups and downs along
the way can be), how long you have to invest for,
etcetera before you set off.
If you are not sure, then some independent professional
advice is a good first step.
“Would you tell me, please which way
I ought to go from here?”
“That depends a good deal on where you
want to get to” said the cat.
The Cheshire Cat. Alice in Wonderland. Lewis Carroll

6. Beware the cost monsters
Ask what the fund is going to cost you, not just how it is expected
3
Top Tip
to perform. Remember, every pound that is eaten up by costs
is a pound that is not invested and this can lead to an awful
amount of money being lost over time.
Cheaper funds have, and continue to have, an in-built performance advantage.
There are three sets of costs you need to know about:
Beware the Three Letter Acronyms (TLAs)
TER Total Expense Ratio
Eats your fund
PTR Portfolio Turnover Rate
Eats your performance
AMC Annual Management Charge
Eats your fund – pays your manager
“It is difficult to systematically beat the market; it
is not difficult to systematically throw money down
a rat hole generating commissions (and other costs).”
Michael C. Jensen. Harvard University

7. Don’t be fooled by the adverts!
The billboards are full of outperformance claims of star fund
managers. But the reality is very different. On average most
fund managers struggle to beat the market index that is their
benchmark (largely because their costs are too high).
For most people, a well diversified portfolio of passive/index funds
4
Top Tip
will be the best way to grow their investments in the long run.
5 year annualised returns – average funds vs the index
IMA Sector Performance vs FTSE index
UK Equity -1.3% pa
Europe ex UK Equity -1.2% pa
US Equity -1.5% pa
Asia ex Japan Equity 0.6% pa
Japan Equity -2.6% pa
Global Equity -1.5% pa
Emerging Market Equity -2.7% pa
UK Gilts -0.7% pa
UK Index-linked Gilt -0.6% pa
Property -3.1% pa
Source: SCM Private
Morningstar. 5 year annualised to end Feb 2010
FTSE Indices except Property – IPD All Property Index
“Most investors, both institutional and individual, will find
that the best way to own common stocks is through an index
fund that charges minimal fees. Those following this path
are sure to beat the net results (after fees and expenses)
delivered by the vast majority of investment professionals.”
Warren Buffett, Chairman, Berkshire Hathaway

8. Avoid the madness of crowds
Most investors fall into the trap of buying high and selling low.
5
Top Tip
Study the chart below. The bars show the amount of money that
UK individual investors put in the market each year while the line
chart shows the year end closing value of the FTSE 100 Index.
The shapes are very similar because most investors tend to rush
to invest after the markets have risen and pull back when they
are doing badly.
Ideally it is much better to buy low and sell high, but as no-one
knows what the market is going to do, it is best to stick to a
sensible long-term plan and invest in a diverse set of assets.
25,000 Amount invested 7,000
FTSE 100 6,500
20,000 6,000
FTSE 100 Year-end Close
Amount invested – £m
5,500
15,000 5,000
4,500
10,000 4,000
3,500
5,000
3,000
0 2,500
2000
2002
2003
2004
2005
2006
2007
2008
2009
1992
1993
1994
1995
1996
1997
1998
1999
2001
Source: IMA
“The time to buy is when there’s blood in the streets.”
Baron Rothschild, an 18th century British nobleman. Rothschild made a fortune
buying in the panic that followed the Battle of Waterloo against Napoleon.

9. Don’t put all your eggs in one basket
We all know that there’s no such thing as a free lunch but
there’s also no such thing as a sure-fire bet on the stock market.
6
Top Tip
Even the most fantastic looking investment opportunities can
and do go wrong.
Therefore make sure that you own a good spread of investments
as the best way to spread your risks. This is called diversifying.
Remember also that not all types of investments move in the
same direction at the same time.
So when one part of your portfolio is doing badly, you should
be comforted that other bits of it are doing well.
“Diversifying between asset class portfolios as well as within portfolios
is more “efficient” than doing only one of those, or neither.”
H.Markowitz*, M.Hebner, M. Brunson. Does Portfolio Theory Work During Crises? July 2009
*Nobel prize winner

10. Balancing act
Different markets will grow at different rates
7
Top Tip
over time. This means that the amount you have
invested in different markets will change which will
make your portfolio drift away from your original
long term investment plan.
It makes sense to bring everything back into line
occasionally – but not too often as it costs money
to do. This is called rebalancing.
Best advice says not more than quarterly, probably
at least annually.
Equities
Bonds
“The bottom line is it’s your hard-earned money. You should pay
attention to it over time. ...If your approach is, “I’m not going
to pay attention to it," then it is your fault that it doesn’t work.”
Certified Financial Planner Jon L. Ten Haagen

11. Top Tip
8
Don’t be shy
When you go to buy a refrigerator you understand what
it is supposed to do for you, how much it costs, how
much it costs to run, and what happens if it goes wrong.
Same goes for investment. It is worth asking the dumb
questions to really find out what you are investing in.
Or, if not, pay someone who is expert and independent
to find out for you. As many people learned to their cost
in the credit crunch, financial products are designed
by some very clever people. Unfortunately they aren’t
always so clever when it comes to explaining the risks.
Make sure you know what you are investing in…
Cash funds
if in doubt before jumping in ask for help. Deriv
Bonds ative
s
Equitie
s
ty
Proper
“People spend more time and effort to buy the right refrigerator
than they do to buy the right funds."
Peter Lynch, Legendary Manager of Fidelity’s Magellan

12. Time and time again
Markets are volatile so one way to invest is
9
Top Tip
to drip-feed your money into the market over
a period of time.
If you are very risk averse, regular saving
is a good way to invest as it slowly adds your
money to the market rather than investing
all in one go, smoothing the up and downs
of your investment. But don’t forget, less risk
means less return in the long run.
“Little and often fills the purse.”
Proverb

13. Ensure interests are aligned
Make sure that you trust your adviser. Most will happily
spend an initial hour with you for free.
10
Top Tip
Try a few out until you find one on your wavelength –
it’s your money so it makes sense to get it right.
And when you invest we think it is a good idea to find out
if the manager invests a significant amount of their own
money in the funds they run. It’s a simple way of seeing
if your interests are aligned.
Is their money where their mouth is?
“Wall Street is the only place that people ride to in a Rolls Royce
to get advice from those who take the subway.”
Warren Buffett, Chairman, Berkshire Hathaway

14. The answer is not in the stars
Bonus
There are lots of companies giving awards, stars
Top Tip
and “A”s for performance. But do they work?
Research published in 2010 by fund ratings agency
Morningstar in the US, looked at what the best predictors
of future performance were.
They looked at their own ratings and other factors from
2005 to 2008 to see what was the best predictor of 2009
and 2010 performance:
“If there’s anything in the whole world of mutual funds that
you can take to the bank, it’s that expense ratios help you
make a better decision. In every single time period and
data point tested, low-cost funds beat high-cost funds.”
They concluded:
“Investors should make expense ratios a primary test in
fund selection. They are still the most dependable predictor
of performance.”
“To pay no attention to costs is probably the
biggest dumb mistake investors can make.”
John Bogle. Founder Vanguard. FT 02/03/2009

15. Summary
1. Get the big rocks in place
The importance of asset allocation
2. Stay off the road to nowhere
Know your end goals
3. Beware the cost monsters
Higher costs means less of your money working for you
4. Don’t be fooled by the adverts!
Past performance really isn’t a good guide to the future
5. Avoid the madness of the crowds
Don’t fall into the trap of buying high and selling low
6. Don’t put all your eggs in one basket
Reduce risks by a mix of assets
7. Balancing act
Rebalance your portfolio over time
8. Don’t be shy
Make sure you know what you are investing in
9. Time and time again
If you are nervous don’t invest all in one go
10. Ensure interests are aligned
Do you trust your adviser?
Bonus. The answer is not in the stars
Low costs are a good predictor of better performance in the future

16. How do I find out more?
Other places to go for help:
The Total Clarity funds we manage are available mainly
through financial advisers. They will be able to tell you
more about how to buy and sell shares in the funds.
To find an adviser:
www.unbiased.com
www.mylocaladviser.co.uk
www.financialplanning.org.uk
For some free guides from the FSA:
www.moneymadeclear.fsa.gov.uk
Website links:
www.tcfinvestment.com
The little book of TCF is not investment, legal, credit, accounting or tax advice, or a guide to suitable
investments appropriate to your individual goals.
The price and value of investments can go down as well as up, and you may not recover the amount
of your original investment. Past performance really isn’t a guide to future performance.
Issued by TCF Fund Managers LLP.
TCF Fund Managers LLP is Authorised and Regulated by the Financial Services Authority.
TCF Investment is a trading name of TCF Fund Managers LLP.
The TCF Investment logo is a trademark of TCF Fund Managers LLP.
TCF Fund Managers LLP is registered in England and Wales number OC305442.
Its registered office is First Floor, 7 Bligh’s Walk, Bligh’s Meadow, Sevenoaks, TN13 1DB