Clients

Q. What is the Nominal Value of a Share?

A. The nominal value of a share is simply an artificial construct of UK Company Law. The only real significance it has is that shares may not be issued for consideration of less than their nominal value. There is no direct link between the nominal value and the market value of any share.

Q. My share certificate says I hold 25p shares - are they worth only 25p?

A. No, 25p is the nominal value of your shares (see answer to previous question). The shares may be worth more or less than 25p. If the shares are valued at exactly 25p this is merely a coincidence.

Q. What does discretionary management mean?

A.  Discretionary management is where the client gives us discretion to buy or sell securities - subject to agreed overall constraints. Please refer to the "Our Services" page  for more information.

Q. What is a Bond?

A. Please refer to the "Asset Classes" page for a detailed explanation.

Q. What is an Equity?

A. Please refer to the "Asset Classes" page for a detailed explanation.

Q. What is APCIMS?

A. APCIMS is the Association of Private Client Investment Managers and Stockbrokers. It is a trade body to which we and most of our competitors belong.  The website  http://www.apcims.co.uk gives further details. APCIMS publishes a suite of indexes designed to allow private clients to compare their portfolio performance.

Q. What is Net Asset Value?

A. Net asset Value or NAV represents the assets of the company less its liabilities. By definition, therefore, it equates to shareholders' funds and minority interests. NAV is often expressed in terms of pence per share. A number of equity sectors are commonly valued in relation to NAV per share. These include Real Estate and Investment Trusts. Due to the quirks of accounting standards NAV may be an extremely unreliable guide to the value of many commercial and industrial companies.

Q. What is risk?

A. Please refer to the "Risk Classification" page for a brief introduction to the topic.

 Q. What is the difference between an investment trust and a unit trust?

A. Both are examples of what are known as collective or  funds. These funds allow investors to pool their resources to achieve economies of scale and of diversification. The main differences between investment trusts and unit trusts is that the former have fixed capital whereas the latter (and their more modern equivalents, OEICs) have variable capital. The significance is that when an investor wants to buy or sell shares in an investment trust they must find another investor willing to sell to them or buy from them. With unit trusts and OEICs it is possible to buy units or shares directly from the fund or to sell units or shares directly to it. It will, accordingly, always be possible to buy or to sell unit trust units or shares in an OEIC at close to Net Asset Value (see above for explanation of NAV). With investment trusts, by contrast, there may exist a significant gap between the dealing or market price and the underlying NAV. This gap is described as a discount when the share price is below NAV and a premium when it is above.

There are two other significant differences between investment trusts and unit trusts. The first is that investment trusts are permitted to use gearing (i.e. to borrow money to invest) whereas unit trusts are not. If used judiciously gearing can be positive since it enhances returns to shareholders when prices are rising. On the converse it can accelerate losses when prices are falling. The second significant difference is that investment trusts tend to have lower total expense ratios than unit trusts. This difference can amount to 1% p.a. or more and is a direct drag on unit trust performance.

As a general rule we prefer investment trusts to unit trusts on the grounds that their ability to use gearing and their lower expense ratios more than compensate for any additional volatility.  

Q. What is the difference between income and capital?

A. As a broad rule of thumb we regard recurring distributions such as coupon payments on bonds or dividends from equities as being income and all other items as being capital. An income receipt from an investment should not impair that investment's capacity to produce future distributions of at least equal magnitude. This definition conforms broadly to the approach used for UK taxation purposes.  

Q. What is your investment approach or strategy?

A. Please refer to the "Investment Approach" page.

Q. What is your Privacy Policy?

A. Please refer to the "Disclosures" page.