A SOLUTION DESIGNED FOR PERSONAL INJURY INVESTORS

Transcription

1 INTRODUCING THE7IM PERSONAL INJURY FUND A SOLUTION DESIGNED FOR PERSONAL INJURY INVESTORS

2 INTRODUCING THE 7IM PERSONAL INJURY FUND AN INVESTMENT SOLUTION FOR PERSONAL INJURY AWARDS HELPING TO PROVIDE LIFELONG FINANCIAL SECURITY Personal Injury investors are enshrined in law as a different class of investor. At 7IM we have recognised that distinction and provided an investment solution that recognises it too. We understand that Personal Injury investors cannot afford to endure serious losses and that you are extremely unlikely to be able to top up your investment funds. We understand that as Personal Injury survivors you have usually experienced life changing events, so you cannot afford to take unnecessary risks with your money; capital is vital to your future financial wellbeing and in many cases will be needed for many years to come. At the same time a reasonable rate of return is going to be required. As a Personal Injury survivor, ironically, the younger you are, the less risk you can take with your money. It has to work for you for potentially a very long time. And to add to the challenge, the determination of your award is treated, in law, as an exact science, the concept being to provide not a penny more, not a penny less over the period of the loss.... Whereas, of course, life is not an exact science people s lives and circumstances evolve over time, or indeed they can change overnight. We have tried to bear all of this in mind in creating the 7IM Personal Injury Fund. The investment challenge Because we know how important it is for Personal Injury investors to avoid serious losses, we have built aversion to serious loss into the heart of the Investment Process for this fund. At the same time we work constantly to create asset mixes that will add that crucial element of growth but without taking on unjustifiable risks. Alex Scott Deputy Chief Investment Officer Cautious investors, like Personal Injury investors, face a dilemma in today s world, where rates of return on cash are low and traditional safe havens, like government bonds, offer very low yields often well below the rate of inflation. Investors in government bonds face the prospect of losses if yields rise back up to their long term averages from today s relatively depressed levels (bond yields rise as capital values fall). Furthermore inflation-linked gilts maturities are priced to offer total returns below the rate of inflation, clearly an unappealing prospect. So all in all in today s environment, it is clear that investors need to accept some risk to have a chance of generating returns ahead of inflation.

3 This means holding some exposure to assets like equities and riskier bonds is necessary to have a realistic prospect of achieving returns ahead of inflation. This can be a worrying proposition for cautious investors who cannot afford to experience sharp losses, with memories of the financial crisis and extreme market volatility rightly fresh in the mind. At 7IM, we believe, that it is absolutely possible to achieve these returns whilst managing the risk and that is what we have built in the Personal Injury Fund. An innovative solution The fund provides a particular solution designed for Personal Injury investors who wish to invest for the long-term and by long term we mean five years or more but do not want to take excessive investment risk with their capital. Personal Injury survivors, as we have said, are not ordinary investors and should not be exposed to typical levels of investment risk. We run the fund as a constant balancing act between managing risk yet taking enough of it to enable a level of capital growth. We all recognise that you need to risk a little to make a little and that means the fund value will fluctuate. And whilst we spend time ensuring we invest as cost effectively as we can, we spend wisely and selectively to get access to instruments that will help achieve the growth and also manage the risks. An investment strategy for Personal Injury survivors The right approach, in our view, is a portfolio based on robust risk modelling, designed to combine a broad range of both risky and less risky assets in such a way as to offer potential for returns ahead of inflation, while significantly limiting the chances of significant losses. This is the approach we take for the Personal Injury Fund, building a resilient framework of bonds, cash, shares and other assets, designed to generate long term returns that can meet cautious investors needs and fit within their risk expectations. Our approach to Personal Injury investment has particular benefits in these difficult times: Clear expected long term return targets based on a structured and disciplined approach Flexibility in portfolio construction enabling the fund to utilise a wide variety of asset classes and instruments appropriate to the changing economic and market conditions Reassurance from the additional stress testing we do to understand and control downside risk, i.e. doing all we can to reduce the likelihood of the portfolio being affected by significant events Cost conscious management. We spend wisely to get access to beneficial investment instruments, which will make the most difference.

4 SEVEN INVESTMENT MANAGEMENT How 7IM manage the Fund three vital steps Structure, process and team are at the heart of our investment management discipline. It is underpinned by robust research, informed by externally sourced data and analysis and enhanced by the experience and views of our Asset Allocation Committee. Our Investment Team then take all those inputs and decide on portfolio construction, both for the long term and for more medium term tactical tilts. 7IM PERSONAL INJURY FUND 7IM INVESTMENT MANAGEMENT TEAM (Decision making) IBBOTSON (Strategic Data & Analysis) ASSET ALLOCATION COMMITTEE (Forward looking) Global Research & External Events STEP 1 The long term (or Strategic Asset Allocation) Once we have agreed the risk tolerance constraints for the Fund, we construct a robust, long-term, allocation which combines different asset classes such as equities, bonds, commodities, hedge funds and cash. These asset classes have varying risk and return characteristics and how we put them together has consequences for the target return and the overall volatility of the portfolio. We analyse over 30 years worth of data at this stage of the process. STEP 2 Taking account of the here and now (or Tactical Asset Allocation) We then make shorter-term tactical adjustments, looking to protect the portfolio from undue volatility by reducing exposure to asset classes that we believe are vulnerable perhaps due to overvaluations or to an unhelpful economic environment. We also aim to add additional returns by putting more emphasis on asset classes which we believe offer the best return prospects, whether due to their cheap valuations or a very supportive economic environment. We operate these tactical adjustments within a controlled risk framework, in order to ensure that the portfolio s risk profile does not move out of agreed limits. And we do this with a close eye on costs, prioritising low-cost, index investments to gain the major asset class exposures, but spending carefully to gain exposure to active managers in asset classes or strategies where we think they can offer real value.

5 INTRODUCING THE 7IM PERSONAL INJURY FUND STEP 3 Implementation using mainly passive investments And finally, we then consider the most appropriate tools to implement the strategy. Using passive instruments, such as Exchange Traded Funds and Index products, provides us with the opportunity to reduce the costs of the fund, whilst continuing to offer a broadly diversified strategy. In addition, we have the ability in house to create baskets of stocks using smart-passive approaches allowing precise implementation of the asset allocation. At the same time we will, on occasions, use active investments where we think the additional cost will bring benefits. 6 MONITOR THE PORTFOLIOS 5 ADJUST FOR CURRENT VIEWS 1 REVIEW RISK PROFILE THE 7IM PERSONAL INJURY FUND 4 SELECT SECURITIES OR FUNDS 2 ANALYSE HISTORIC DATA 3 ANALYSE INVESTMENT OPTIONS What the Fund offers investors An investment process that helps your peace of mind Rigorous risk management, based on institutional standards and techniques An approach that aims, over the years, to protect your buying power against the eroding effect of inflation Realistic return expectations in a lower growth, slower environment. In brief it s an investment designed to suit cautious investors who simply cannot afford to take a big loss.

6 INTRODUCING THE 7IM PERSONAL INJURY FUND ABOUT SEVEN INVESTMENT MANAGEMENT Set up back in 2002, Seven Investment Management (7IM) are now managing and administering over 6 billion of assets with a staff of over 150, providing a broad and quite unique combination of investment management services. We developed a business which is really focussed on what is right for the client. We wanted to be clear and transparent about how we managed money; about what we charged and about what we saw happening in the world and therefore the consequences for the portfolios. Our business is still pioneering, still innovating and all the while, listening to what the financial planning community and their clients want. Tom Sheridan 7IM Chief Executive It is a privilege to look after clients money, not a right. We tend to be rather more cautious than other managers when we are investing for our clients, as we don t want to jeopardise what they have worked long and hard for. We don t aim to shoot the lights out with our performance but we think that steady performance over the long term will win out. We emphasise three things at 7IM cost conscious portfolios, with steady performance and managed risk. This approach helps our clients sleep at night. Justin Urquhart Stewart 7IM Co-Founder and Head of Corporate Development AWARDS 7IM have won a series of technology, service and investment awards over recent years. We won the Leading Innovation Award at the Aberdeen UK Platform Awards 2013 for our app, 7IMagine. We were delighted to be awarded Best Multi Manager Provider 2013 for the second year running by Moneyfacts in their awards. Our Discretionary Service gained a prestigious 5 star rating from Defaqto (a leading independent financial research company) in 2012, 2013 and For more information call or visit PIF 3/14 Seven Investment Management LLP is authorised and regulated by the Financial Conduct Authority. Member of the London Stock Exchange. Registered office: 125 Old Broad Street, London EC2N 1AR. Registered in England and Wales number OC