Charity Investment Solutions

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1 Charity Investment Solutions This document is for institutional investors and investment professionals only and should not be distributed to or relied upon by retail clients.

2 Contents 01 Our commitment to charities 02 Supporting the charity sector 03 Respect and responsibility 04 Achieving your charity's investment objectives 06 Global investment approach 08 Our conventional approach 09 Our target return approach 10 Our combined approach 12 Exceptional service

3 Our commitment to charities Standard Life Wealth is an independent discretionary investment manager with extensive experience working with both large and small charitable organisations across the UK. Managing funds for charities is a core component of our business. We have a team of specialists that can help you meet the needs and objectives of your organisation, and innovative investment solutions to help you achieve these. Charities that invest with Standard Life Wealth benefit from the global reach and financial strength of our parent company, Standard Life Investments (Holdings) Limited, one of the UK s leading asset managers. Relationships for the long term We pride ourselves on the level of personal contact that we provide each of our clients. Charity trustees can take comfort from the fact that the person they meet at the outset is the same person that invests their money. We believe this is the best way to build long-lasting, mutually beneficial relationships. It also encourages within our team high levels of accountability and loyalty towards our charity clients. We are proud to be part of a heritage dating back nearly 200 years. Our longevity and success have been built on a very forward-thinking and innovative approach. Our charity clients can take comfort from the stability and strength of our firm and the depth of our investment experience. Patrick Trueman, Head of Charities, London, Standard Life Wealth Charity Investment Solutions 03

4 Supporting the charity sector We are proud of the unique investment solutions we can offer our charity clients and work with a wide variety of charitable organisations. We appreciate the duty of care that a trustee feels. We understand that reputation is everything in the charity sector and that you need to be certain that you are selecting an investment manager that recognises this. Our charity clients value the prudence, good governance and solid financial management that underpin everything we do. A breadth of charity clients Social/Community/Sport General Healthcare Educational Animal Welfare Religious Military Source: Standard Life Wealth, as at 31 March 2015 Your vision, our expertise When you feel confident that your charity s investments are being diligently cared for, you can focus on what is really important continuing its good work. As such, we believe you need experts who understand investment management but who also know the charity sector. Our team of charity specialists, located in offices throughout the UK, can offer your organisation this critical combination of skill and experience. With wide-ranging involvement in many charity-focused bodies, as well as philanthropic causes, our team members are themselves committed to supporting the ethos of your charity and building a long-term relationship. 04 Charity Investment Solutions

5 Respect and responsibility Many charities want to align their investments with their underlying mission or goals. At Standard Life Wealth, we are able to accommodate a wide range of ethical considerations and criteria, and our charity experts are experienced in working within these parameters. We can build portfolios that can enable you to invest without compromising your ethical principles. By carefully and transparently aligning your organisation s portfolios with its charitable ethos, we endeavour to enrich its reputation, avoid alienating supporters and ultimately further its good work. Stewardship and ESG The principles of corporate social responsibility and sustainability are embedded across everything both we and our parent company do. Standard Life Wealth is able to draw upon the dedicated environmental and social research carried out by colleagues in both the responsible investment and the governance & stewardship teams at Standard Life Investments. Collectively, the members of these teams have almost 200 years experience in their fields and are committed to leading the debate on responsible investment. The team engages regularly with investee companies on our behalf to hold them to account and to promote high standards of business practice. Standard Life Investments is an industry leader in this increasingly important field. It was one of the initial signatories of the Principles for Responsible Investment, and is just one of a few companies to conduct an annual ethical survey to gauge the major considerations that are influencing clients. It also fully supports the newly launched United Nations Guiding Principles on Business and Human Rights. Standard Life Investments received industry endorsement when it was named the No.1 Leading UK Asset Management firm for SRI/ESG at the Extel 2015 awards. As one of the UK's leading investors, it is only fitting we should have a dedicated responsible investment team. Our professional reputation encourages the companies in which we invest to consider our views and promote best practice standards. Amanda Young, Head of Responsible Investment, Standard Life Investments Charity Investment Solutions 05

6 Achieving your charity s investment objectives At Standard Life Wealth we understand the financial challenges many charities face. Income is increasingly under pressure from low bond yields and meagre returns on cash, government funding cuts and a decline in giving. As a result, the ability of your investment returns to meet liabilities and carry out core activities has never been more important. However, with interest rates at historically low levels and financial markets still volatile, how can you be confident that your investments will meet your charity s specific aims? Solutions tailored for you We are a solutions-focused investment company, with extensive experience of managing charity money. We are united around a single motivation to provide the best possible outcomes for our charity clients. Our first step is always the same taking the time to get to know your charity s requirements. We work meticulously to gain insight into your organisation and understand its investment time horizon and attitude to risk. From there, we offer two distinct investment approaches, or a blend of both. We believe this flexibility sets us apart from our peers and allows us to create truly tailored solutions that aim to consistently meet your organisation s specific needs and objectives. 06 Charity Investment Solutions

7 Conventional approach Has a proven global institutional investment approach Is direct and transparent Is bespoke and suited to charities with ethical onstraints, complex requirements or custom benchmarks Has a range of income-focused solutions Has a strong performance track record Target return, volatility managed approach Aims to deliver a specific cash-plus return over rolling three-year periods within the range of LIBOR +1% to LIBOR +4% Potential to provide long-term equity performance with less than half the volatility Additionally aims to deliver a positive return in every 12-month rolling period regardless of market conditions Has a broad investment universe, which allows for superior diversification Has a strong record of outperformance over the targeted rolling three-year period As with any form of investing, the value of an investment in our approaches is not guaranteed and can go down as well as up. An investor may get back less than they invested. Past performance is not a guide to the future. Charity Investment Solutions 07

8 Global investment approach Unlike many of our charity investment peers, we scour the globe for the most compelling investment opportunities for inclusion in our portfolios. We are able to leverage the extensive resources of Standard Life Investments which includes: an award-winning multi-asset investing team (MAIT) of more than 40 experienced individuals who are at the forefront of multi-asset investing a team of 60-plus equity portfolio managers/analysts in-depth and continuous coverage of over 2,100 companies across the global stock universe company access at the very highest levels, conducting around 3,000 company meetings each year a strong and experienced fixed income team of more than 70 professionals fixed income expertise that spans government and investment grade bonds, high yield credit, inflation-linked bonds and emerging market debt a dedicated real estate investment team, comprised of over 150 real estate professionals. This type of global investment reach affords us complete freedom to select from any funds and securities in the market, directly and transparently, for the benefit of our charity clients. We believe our thorough research and in-depth analysis of global markets allow us to predict, react and adapt faster than the competition. This helps us maintain our position as a leading investment house and deliver the investment performance our charity clients expect. Andrew Milligan OBE, Head of Global Strategy, Standard Life Investments 08 Charity Investment Solutions

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10 Our conventional approach Seeking longer-term, sustainable growth When charities choose our conventional investment strategy, we use a single-portfolio approach, investing across a combination of asset classes. We look beyond traditional boundaries established by simply considering asset allocation. Instead, we adopt a broader perspective and look for investments that we believe can provide predictable cashflows, the potential for long-term compounding growth and good diversification benefits. By taking a truly global approach, we can uncover some of the best investment ideas from around the world and invest in them directly. Currently, a significant proportion of the UK equity market's income comes from just a handful of companies. When you consider how damaging a cut in the dividend payment of one of these companies could be to your income, the advantages of a far-reaching global approach are clear. Conventional approach in action We work with a number of charities that have a minimum income target from their portfolio. Our focus is, therefore, directed to higher-yielding securities. A number of our charity clients are seeking a yield in excess of 4% on their portfolio to meet their annual expenditure requirements. Our global approach to stock selection allows us to directly access the increasing number of foreign companies providing attractive dividend yields. This approach distinguishes us from other firms that seek to gain global exposure through third party funds which may add costs. We recognise the importance of meeting and exceeding our charity clients' income requirements and are confident that our approach can continue to do this. 010 Charity Investment Solutions

11 Our target return approach Clear goals, clear focus Many investment approaches will be benchmarked against the performance of an index and that will work for some investors. However, if the market has fallen by 15% for example, while your investment has fallen by 12%, that outperformance can feel inadequate. With our target return, volatility managed solution, we take a fundamentally different approach and measure our success against our ability to achieve your organisation s specific goals. That is our benchmark. Our target return approach aims to deliver a specific cash-plus return with lower volatility over a three-year rolling period and, critically, to not lose you money over 12 months. However, like any form of investing, it doesn't offer a guarantee, and it might not attain its objectives over this, or indeed any other period. The approach makes substantial use of derivatives to seek its investment objective and to manage its volatility. Target return in action For charity clients who have a shorter investment time horizon or a specific funding or liability obligation to fulfil, our target return, volatility managed solution can provide charity trustees with greater certainty and is often the optimal solution. An air ambulance charity looking to purchase a new helicopter in three to four years did not want to see the real value of its funds eroded by holding them in cash. However, the charity was also concerned about taking on too much market risk. We were able to meet their needs through our target return strategy. As this approach uses a range of investment strategies that add diversification and seek to smooth returns, we can aim to preserve the real value of a charity s assets, while providing some growth. This has allowed the organisation to plan for the purchase of its air ambulance with a greater degree of certainty. Charity Investment Solutions 011

12 Our combined approach Standard Life Wealth is in a unique position to be able to offer charity clients, where appropriate, a bespoke blend of both its target return and conventional investment strategies. These two distinct but complementary approaches, when combined, can help to achieve a truly tailored investment solution focused on a client s unique objectives and based upon their specific return target and appetite for risk. We believe we are one of only a few UK investment managers to provide such an innovative solution to charity clients. Your organisation may require a combination or all of the following outcomes: sufficient reserves in the future to fund projects or simply to cover unexpected expenses funds for long-term expansion plans a steady and sustainable level of income to fund the day-to-day running of your organisation or to provide grants. Combined approach in action Charities that want to access capital to support their endeavours but still retain a long-term investment time horizon might want to consider a dual approach. This allows trustees to access different diversified pots, depending on market conditions and where we are in the investment cycle. We are currently working with an organisation that wanted to derive a high income from their assets to fund day-to-day operations but also wanted to derive an RPI+ return for real growth over the medium and long term. We established two portfolios that we run in parallel. A conventionally managed income-focused portfolio for their short-term cash requirements and a target return portfolio that seeks to grow their assets faster than inflation. 12 Charity Investment Solutions

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14 Exceptional service Standard Life Wealth is committed to providing your charity with an exceptional level of service for the long term, and we strive to make investing with us as simple and straightforward as possible. To achieve this, we offer a genuinely bespoke investment service as well as a range of other services that benefit your charity. Review meetings Your Client Portfolio Manager is available for regular face-to-face review meetings. As markets are constantly changing, these meetings are a valuable opportunity to make sure our solutions continue to meet the specific requirements of your charity. Bespoke reporting We provide personalised quarterly reports that detail your charity s current portfolio valuation, cash and transaction statements, as well as performance and investment commentary. If you require more regular or tailored communication on the performance of your investments, we can arrange this. Secure online access You will have access to a secure online portal where, among other things, you can view daily valuations of your organisation s portfolio. Tax information We will prepare statements and include details of your organisation s investments to aid preparation for your financial year-end. 14 Charity Investment Solutions

15 Technical support We recognise that charity trustees have a number of legal responsibilities, including how they select and work with investment managers. That is why we are committed to helping you fulfil your legal responsibilities and supporting your organisation s financial ambitions. As part of our service, we can provide a charity factfind and investment policy statement, and a trustees duty and obligations summary. We may also be able to arrange for other technical support to be provided where appropriate. Trustee training We can run sessions to help broaden trustees' knowledge and understanding of investments. We can also provide investment seminars on industry topics that are relevant to the charity sector. Charity Investment Solutions 15

16 us at There is no guarantee that any you send will be received or will not have been tampered with. We recommend you do not send confidential details by . Visit our website Standard Life Wealth Limited, registered in Scotland (SC317950) at 1 George Street, Edinburgh EH2 2LL. Standard Life Wealth is authorised and regulated by the Financial Conduct Authority. SLWCHBR00_0515_A5_TCM Standard Life, images reproduced under licence