January 2012

Myddleton Croft Investment Managers Balanced Moderate Risk Model
Myddleton Croft Investment Managers

KEY FACTS
Portfolio Risk Spectrum
MANAGERS COMMENTARY The woods are lovely, dark and deep, But I have promises to keep, And miles to go before I sleep, And miles to go before I sleep. Greek PM Papademos doubtless understands this Robert Frost poem like no other. As at the end of January, no deal has been struck despite the many official announcements that a settlement is nigh. The economic backdrop in Europe looks testing given the austerity measures put in place, and whilst a conclusion to the Greek crisis would be positive for sentiment, we remain concerned that the level of Greek debt even following the write-down is unsustainable and that they may revisit this issue in a couple of years. Moreover, whilst the euro zone leaders have stated that Greece is a special case, we would caution that a conclusion to the Greek debt negotiations may simply act as a precedent for more. I would expect Ireland and Portugal will invoke what is sauce for the goose is sauce for the gander. That being said, January was a better month for equities and risk assets in general. US economic data has been better than expectations and while no-one could say that they are back to their halcyon days, it is better at the margin. US Federal Reserve Chairman, Ben Bernanke, gave guidance that federal funds rate would remain below 1% until the end of 2014, his previous language was that rates would remain low until mid 2013. He also gave strong guidance of further quantitative easing (QE), something we expect to see from the Bank of England. Action by the European Central Bank (ECB) to offer three year collateralised loans (LTRO) to European banks has had a profound effect on the banking sector, bank debt and sentiment toward risk assets in general. Given its success, a further and larger round of LTRO is due in late February. We have some issues with LTRO and believe it is not a silver bullet, but we are not Canute and recognise that in the short term the tide of sentiment toward risk asset has improved. Despite this, we are not minded to change our stance toward banks and bank debt as these investments have far too much of a binary outcome, particularly should any economic shock take place. As if to illustrate this point, two interesting pieces of information which came across my desk recently: Firstly, Siemens applied for a banking license so that it could lodge its cash directly with the ECB rather than rely on euro zone banks. On a similar note GlaxoSmithKline has been pulling cash out of some euro zone countries in case the debt crisis takes a turn for the worse. Such behaviour by two blue chip companies, not prone to fits of pique, does illustrate a distinct lack of confidence in the euro zone banks. Whilst we expect investment conditions will be very challenging for several years as we work our way out of the Wests balance sheet recession, it is worth remembering that Japan had three rallies of over 40% in the 1990s whilst going through its deleveraging. This was not due to a rapid improvement in corporate earnings but a change in sentiment. Earnings or profit growth are facts whereas what you pay for a company or market is driven by sentiment so an optimistic outlook will lead to higher prices being paid. Clearly the converse is also true. Even a sentiment move from bearish to neutral can have a material effect on equity prices and one which may well be a stronger driver of equity markets this year than the modest earnings growth which is expected in developed markets. We have been cautious, correctly so for some years however it is important to be pragmatic for the reasons mentioned in the paragraph above and to focus on looking out of the windscreen in a (investment) vehicle and not out of the rear view mirror. Less accidents happen that way!!! We continue to see the big picture (the longer term one) of slow growth and event risk associated with the Wests debt burdens however one must acknowledge that there may be periods of improving sentiment, even if these moves are transitory we should keep an eye open for them. To that end we have remained neutrally weighted against our benchmark in equities for some months, although more defensively positioned than the market, and positive on corporate bonds expecting credit spreads to tighten. In late January we did consider that, given one of the strongest starts to a year in many markets for a decade or more, coupled with the size of the rally off the late September lows, buying some protection against a market correction was prudent.
January 2012
Defensive Cautious Moderate Adventurous Highly Adventurous Speculative

Investment Managers Patrick Toes
1 2 3 4 5 9
Investment Director with over 20 years experience in fund management. Previously a member of Rensburg Sheppards Asset Allocation and Fund Selection Committees for over 9 years and former chairman of those committees at BWD Rensburg, he holds a MSC in Investment Analysis and is an Associate Member of the Society of Investment Professionals (ASIP).
David Cowell
Chief Executive, possessing over 40 years of experience in financial services, with over 25 years being investment management focussed. David formulates the macro economic position and leads the investment process across the portfolio range. He also has over 10 years experience of business consultancy to small and medium sized enterprises.
Stephen Wood
Investment Manager graduated from the University of Manchester in economics. His industry experience ranges from petro-chemical finance to pharmaceutical development within large multinationals. He holds several financial qualifications including CIMA and the IMC and is currently working towards further professional qualifications. He joined Myddleton Croft in 2010.
For Further Information Call :
0113 274 7700

Email : info@mcim.co.uk
Or visit us at : www.myddletoncroft.co.uk
IMPORTANT INFORMATION This communication is for professional investors only and should not be relied upon by private investors. This document is provided to illustrate Myddleton Croft Investment Managers model portfolios and is for information purposes only and does not constitute an advertisement, financial promotion or financial, professional or investment advice. Nothing in this document constitutes a recommendation suitable or appropriate to a recipient's individual circumstances. It should not be inferred that all portfolios will perform exactly the same as the model portfolios as other factors, such as capital gains tax & the time taken to invest the portfolio, may affect individual portfolio performance. Please remember that past performance is not a guide to future performance and that the value of investments may go down as well as up and any opinions expressed are subject to change and may not be current views.
Myddleton Croft Investment Managers, 1 Woodside Mews, Clayton Wood Close, Leeds, LS16 6QE T: 0113 274 7700 F: 0113 274 7711 E-mail: info@mcim.co.uk Website: www.myddletoncroft.co.uk Myddleton Croft Ltd is authorised and regulated by the Financial Services Authority. Registered in England & Wales number 05782909. VAT number UK 889 241088. Registered office: 11 Clifford Avenue, Ilkley, LS29 0AS.

Balanced Defensive Risk Model
KEY FACTS
January 2012
PORTFOLIO OBJECTIVE
To generate a portfolio with a balance of income and capital growth over the medium to long term by harnessing the higher return potential of equity markets. The model will seek to reduce the fluctuations in capital values inherent in equity investments through a significant allocation to fixed interest, commodities, absolute return/hedge funds and other non-equity vehicles. Over the medium term, a base case would be 40:60 allocation to equity and non-equity investments respectively. However this allocation is flexible and could vary between 30% and 50% in equities, dependent on valuation and risk. Portfolios are also available with an income or growth mandate.

1 2 3 4 5 9
Investment Profile
Balanced
PORTFOLIO KEY ATTRIBUTES

Performance Since Launch (Jan 2008)
David Cowell
3 Year Rolling Volatility
Stephen Wood
0113 274 7700

Asset Allocation
Performance Statistics

Balanced Cautious Risk Model
KEY FACTS
January 2012
PORTFOLIO OBJECTIVE

1 2 3 4 5 9
Investment Profile
Balanced

David Cowell
Stephen Wood
0113 274 7700

Asset Allocation

Balanced Moderate Risk Model
KEY FACTS
January 2012
PORTFOLIO OBJECTIVE
To generate a portfolio with a balance of income and capital growth over the medium to long term by harnessing the higher return potential of equity markets. The model will seek to reduce the fluctuations in capital values inherent in equity investments through a significant allocation to fixed interest, commodities, absolute return/hedge funds and other non-equity vehicles. Over the medium term, a base case would be 50:50 allocation to equity and non-equity investments respectively. However this allocation is flexible and could vary between 40% and 60% for each asset class, dependent on valuation and risk. Portfolios are also available with an income or growth mandate.

1 2 3 4 5 9
Investment Profile
Balanced

David Cowell
Stephen Wood
0113 274 7700

Asset Allocation

Balanced Adventurous Risk Model
KEY FACTS
January 2012
PORTFOLIO OBJECTIVE

1 2 3 4 5 9
Investment Profile
Balanced

David Cowell
Stephen Wood
0113 274 7700

Asset Allocation

Balanced Highly Adventurous Risk Model
KEY FACTS
January 2012
PORTFOLIO OBJECTIVE

1 2 3 4 5 9
Investment Profile
Balanced

David Cowell
Stephen Wood
0113 274 7700

Asset Allocation

Balanced Speculative Risk Model
KEY FACTS
January 2012
PORTFOLIO OBJECTIVE

1 2 3 4 5 9
Investment Profile
Balanced

David Cowell
Stephen Wood
0113 274 7700

Asset Allocation

Enhanced Income Portfolio
KEY FACTS
Q4 2011
PORTFOLIO OBJECTIVE
The objective of the Enhanced Income Portfolio is to target a 6% return of which 4% can be distributed either half yearly, yearly or rolled up. The secondary aim is to provide a degree of protection against the effects of inflation. The portfolio is predominantly invested in bonds, which will comprise 70% of the allocation on average with the balance invested in equities, absolute return and commodities. The Enhanced Income Portfolio was launched at the beginning of 2011. It should be noted that the performance and volatility data before that date (presented below) is from the back-tested portfolio and is provided for illustration purposes only.
Investment Profile
EIP

Back Tested Performance Since Jan 2008
David Cowell
Stephen Wood
Back Tested 3 Year Rolling Volatility
0113 274 7700

Asset Allocation

January 2012

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Myddleton Croft Investment Managers Balanced Moderate Risk Model

Myddleton Croft Investment Managers

Defensive Cautious Moderate Adventurous Highly Adventurous Speculative

For Further Information Call :

0113 274 7700

Myddleton Croft Investment Managers Balanced Moderate Risk Model

Defensive Cautious Moderate Adventurous Highly Adventurous Speculative

PORTFOLIO KEY ATTRIBUTES

3 Year Rolling Volatility

For Further Information Call :

0113 274 7700

Myddleton Croft Investment Managers Balanced Moderate Risk Model

Defensive Cautious Moderate Adventurous Highly Adventurous Speculative

PORTFOLIO KEY ATTRIBUTES

3 Year Rolling Volatility

For Further Information Call :

0113 274 7700

Myddleton Croft Investment Managers Balanced Moderate Risk Model

Defensive Cautious Moderate Adventurous Highly Adventurous Speculative

PORTFOLIO KEY ATTRIBUTES

3 Year Rolling Volatility

For Further Information Call :

0113 274 7700

Myddleton Croft Investment Managers Balanced Moderate Risk Model

Defensive Cautious Moderate Adventurous Highly Adventurous Speculative

PORTFOLIO KEY ATTRIBUTES

3 Year Rolling Volatility

For Further Information Call :

0113 274 7700

Myddleton Croft Investment Managers Balanced Moderate Risk Model

Defensive Cautious Moderate Adventurous Highly Adventurous Speculative

PORTFOLIO KEY ATTRIBUTES

3 Year Rolling Volatility

For Further Information Call :

0113 274 7700

Myddleton Croft Investment Managers Balanced Moderate Risk Model

Defensive Cautious Moderate Adventurous Highly Adventurous Speculative

PORTFOLIO KEY ATTRIBUTES

3 Year Rolling Volatility

For Further Information Call :

0113 274 7700

Myddleton Croft Investment Managers Balanced Moderate Risk Model

PORTFOLIO KEY ATTRIBUTES

Back Tested 3 Year Rolling Volatility

For Further Information Call :

0113 274 7700

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