MANAGERS’ MONTHLY COMMENTARY

INVESTMENT MANAGERS:
Patrick Toes 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. David Cowell Chief Executive, possessing over 40 years’ experience in financial services, with over 25 years being investment management focussed.

JANUARY 2013

76 DAYS AND COUNTING
The current rally was 76 days old as at the end of January with stock markets in full ‘risk on’ mode. In fact this month has been a tremendous month for equities. As we mentioned in our year end review and outlook, we considered that the market was poised to move higher, not because the outlook for the global economy or corporate earnings looked strong, rather that risk events investors have been grappling with had been ‘kicked further down the road’. This would give investors the excuse to be more confident, if only in the short term. Our investment approach is to look towards the medium term investment horizon (3-5 years) as we believe many - or perhaps most - investors focus on short term performance and have the tendency to get too preoccupied by market noise. You may have read on our website about the need to be hyperopic as an investor and not myopic (far-sighted, not short-sighted). The focus of many of these investments is on quality and strength in companies’ business models. Alongside that, we have non-equity exposure which we feel provides protection in markets which will exhibit low growth and a high degree of volatility. You will often hear us refer to quotes from Warren Buffett. One which describes his approach to investing in equities is: "In business, I look for economic castles protected by unbreachable 'moats'."

SALES: Julie Jones
Julie has over 20 years experience of working in investment sales and marketing, previously as Head of UK Retail Sales for BNY Mellon (Newton Investment Management).

For further information call :

0113 274 7700
Email : sales@mcim.co.uk Or visit us at : www.myddletoncroft.co.uk

Our approach to investing is to use that castle and moat mentality to manage the whole of a client’s portfolio, both equities and non-equities. However, we have always been interested in looking to augment our medium term views by identifying investments where the herd becomes too pessimistic and, for that matter, the converse. We refer to this as our drawbridge. This allows us to add a tactical and opportunistic approach to investing, employing a contrarian or mean reverting strategy, in effect, looking for out-of-favour laggards which we believe could catch up with the herd. We utilised this part of our armoury to take a more positive stance toward risk assets toward the end of 2012. This more positive stance has given us a strong start to the year which you can see in our model factsheets (attached). One opportunity which we noticed in late 2012 was in US small companies with a value bias. We saw four positives: Firstly, the underperformance is particularly marked within small cap value stocks (Russell 2000 Value) relative to the S&P 500 (see chart 1); secondly, from a valuation perspective small cap stocks with the highest return on invested capital were over 15% cheaper than S&P 500; thirdly, US companies in the S&P 500 have a high risk of margin reduction which are currently at all time highs unlike small cap stocks where margins are well below previous peak levels and finally, should there be a lasting improvement in sentiment we would expect to see an improvement in M&A activity following a weak 2012 and we consider that is a likely positive for small-cap stocks. We added a position to this area in November and have been well compensated for our decision. The charts below show the relative performance of two indices, Russell 2000 Value vs S&P 500, which illustrate the opportunity and how it has been a benefit to our portfolio performance.

IMPORTANT INFORMATION This information has been approved for distribution to professional investors only. The information in this document is believed to be correct but cannot be guaranteed. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. This material is not intended as an offer or solicitation for the purchase or sale of any security or any other action, without first seeking advice as to the suitability of it for your needs.

Although not a ‘drawbridge’ trade per se, we would bring your attention to another area where we are seeing a change in the road ahead. I attended the M&G conference in January, where the focus of attention from their bond team was on inflation and its inevitable corollary for higher gilt and western sovereign bond yields. The new Governor of the Bank of England elect, Mark Carney, given his public questioning of the value of inflation targets and his proposals for nominal GDP targeting, may unhinge UK inflation expectations at a risky time in the investment cycle. The new leadership in Japan has targeted a much lower Yen and 2% inflation, when deflation has been the status quo for a generation. Lastly, the long-term build up of liquidity from quantitative easing programmes in the States and Europe over the last four and a half years warrants investors to consider inflation-proofing their portfolios. We have been doing so gradually by reducing duration and owning indexlinked bonds within our fixed interest exposure. I would caution against an all-in bet tomorrow as central banks/governments are on the other side of this trade. Whilst the timing of an upward rise in bond yields is uncertain, we do expect that it is a ‘when’ will this happen rather than ‘if’. Fingers on buzzers.

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.

On Platform
Myddleton Croft Defensive Risk Model
INVESTMENT MANAGERS:
Patrick Toes 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. David Cowell Chief Executive, possessing over 40 years’ experience in financial services, with over 25 years being investment management focussed.

JANUARY 2013

PERFORMANCE SINCE LAUNCH

SALES: Julie Jones
Julie has over 20 years experience of working in investment sales and marketing, previously as Head of UK Retail Sales for BNY Mellon (Newton Investment Management).

2013 PERFORMANCE

For further information call :

0113 274 7700
Email : sales@mcim.co.uk Or visit us at : www.myddletoncroft.co.uk
Platform model portfolios include the cost of underlying investments and Myddleton Croft’s annual management fees but not the respective platform charges.

ASSET ALLOCATION

IMPORTANT INFORMATION This information has been approved for distribution to retail and professional investors only. The information in this document is believed to be correct but cannot be guaranteed. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. Before contemplating any transaction, you should consult your financial adviser. This material is not intended as an offer or solicitation for the purchase or sale of any security or any other action, without first seeking advice as to the suitability of it for your needs. * Platform performance / allocation may differ from model depending on platform availability of underlying investments.

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.

On Platform
Myddleton Croft Cautious Risk Model
INVESTMENT MANAGERS
Patrick Toes 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. David Cowell Chief Executive, possessing over 40 years’ experience in financial services, with over 25 years being investment management focussed.

JANUARY 2013

PERFORMANCE SINCE LAUNCH

SALES: Julie Jones
Julie has over 20 years experience of working in investment sales and marketing, previously as Head of UK Retail Sales for BNY Mellon (Newton Investment Management).
Platform model portfolios include cost of underlying investments and Myddleton Croft’s annual management fees, but not the respective platform charges.

2013 PERFORMANCE

For further information call :

0113 274 7700
Email : info@mcim.co.uk Or visit us at : www.myddletoncroft.co.uk

ASSET ALLOCATION
IMPORTANT INFORMATION This information has been approved for distribution to retail and professional investors only. The information in this document is believed to be correct but cannot be guaranteed. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. Before contemplating any transaction, you should consult your financial adviser. This material is not intended as an offer or solicitation for the purchase or sale of any security or any other action, without first seeking advice as to the suitability of it for your needs. * Platform performance / allocation may differ from model depending on platform availability of underlying investments.

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.

On Platform
IMPORTANT INFORMATION

Myddleton Croft Moderate Risk Model PERFORMANCE SINCE LAUNCH

JANUARY 2013

INVESTMENT MANAGERS:
Patrick Toes 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. David Cowell Chief Executive, possessing over 40 years’ experience in financial services, with over 25 years being investment management focussed.

SALES: Julie Jones
Julie has over 20 years experience of working in investment sales and marketing, previously as Head of UK Retail Sales for BNY Mellon (Newton Investment Management).

2013 PERFORMANCE

For further information call :

0113 274 7700
Email : sales@mcim.co.uk Or visit us at : www.myddletoncroft.co.uk
Platform model portfolios include the cost of underlying investments and Myddleton Croft’s annual management fees but not the respective platform charges.

ASSET ALLOCATION
IMPORTANT INFORMATION This information has been approved for distribution to retail and professional investors only. The information in this document is believed to be correct but cannot be guaranteed. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. Before contemplating any transaction, you should consult your financial adviser. This material is not intended as an offer or solicitation for the purchase or sale of any security or any other action, without first seeking advice as to the suitability of it for your needs. * Platform performance / allocation may differ from model depending on platform availability of underlying investments.

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.

On Platform
NOTE: THE ADVENTUROUS RISK MODEL HAS BEEN RENAMED THE PROGRESSIVE RISK MODEL Myddleton Croft Progressive Risk Model
INVESTMENT MANAGERS:
Patrick Toes 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. David Cowell Chief Executive, possessing over 40 years’ experience in financial services, with over 25 years being investment management focussed.

JANUARY 2013

PERFORMANCE SINCE LAUNCH

SALES: Julie Jones
Julie has over 20 years experience of working in investment sales and marketing, previously as Head of UK Retail Sales for BNY Mellon (Newton Investment Management).

2013 PERFORMANCE

For further information call :

0113 274 7700
Email : sales@mcim.co.uk Or visit us at : www.myddletoncroft.co.uk
Platform model portfolios include the cost of underlying investments and Myddleton Croft’s annual management fees but not the respective platform charges.

ASSET ALLOCATION
IMPORTANT INFORMATION This information has been approved for distribution to retail and professional investors only. The information in this document is believed to be correct but cannot be guaranteed. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. Before contemplating any transaction, you should consult your financial adviser. This material is not intended as an offer or solicitation for the purchase or sale of any security or any other action, without first seeking advice as to the suitability of it for your needs. * Platform performance / allocation may differ from model depending on platform availability of underlying investments.

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.

On Platform
NOTE: THE HIGHLY ADVENTUROUS RISK MODEL HAS BEEN RENAMED THE ADVENTUROUS RISK MODEL Myddleton Croft Adventurous Risk Model
INVESTMENT MANAGERS:
Patrick Toes 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. David Cowell Chief Executive, possessing over 40 years’ experience in financial services, with over 25 years being investment management focussed.

JANUARY 2013

PERFORMANCE SINCE LAUNCH

SALES: Julie Jones
Julie has over 20 years experience of working in investment sales and marketing, previously as Head of UK Retail Sales for BNY Mellon (Newton Investment Management).

2013 PERFORMANCE

For further information call :

0113 274 7700
Email : sales@mcim.co.uk Or visit us at : www.myddletoncroft.co.uk
Platform model portfolios include the cost of underlying investments and Myddleton Croft’s annual management fees but not the respective platform charges.

ASSET ALLOCATION
IMPORTANT INFORMATION This information has been approved for distribution to retail and professional investors only. The information in this document is believed to be correct but cannot be guaranteed. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. Before contemplating any transaction, you should consult your financial adviser. This material is not intended as an offer or solicitation for the purchase or sale of any security or any other action, without first seeking advice as to the suitability of it for your needs. * Platform performance / allocation may differ from model depending on platform availability of underlying investments.

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.

On Platform
Myddleton Croft Speculative Risk Model
INVESTMENT MANAGERS:
Patrick Toes 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. David Cowell Chief Executive, possessing over 40 years’ experience in financial services, with over 25 years being investment management focussed.

JANUARY 2013

PERFORMANCE SINCE LAUNCH

SALES: Julie Jones
Julie has over 20 years experience of working in investment sales and marketing, previously as Head of UK Retail Sales for BNY Mellon (Newton Investment Management).

2013 PERFORMANCE

For further information call :

0113 274 7700
Email : sales@mcim.co.uk Or visit us at : www.myddletoncroft.co.uk
Platform model portfolios include the cost of underlying investments and Myddleton Croft’s annual management fees but not the respective platform charges.

ASSET ALLOCATION
IMPORTANT INFORMATION This information has been approved for distribution to retail and professional investors only. The information in this document is believed to be correct but cannot be guaranteed. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. Before contemplating any transaction, you should consult your financial adviser. This material is not intended as an offer or solicitation for the purchase or sale of any security or any other action, without first seeking advice as to the suitability of it for your needs. * Platform performance / allocation may differ from model depending on platform availability of underlying investments.

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.