Tatton Investment Management Tatton Business Update 50bps platform + DFM overlay for all Market Update A function of confidence Lothar Mentel Chief Investment Officer Paradigm Group October 2013

Tatton Investment Management Tatton Business Update 50bps platform + DFM overlay for all Lothar Mentel Chief Investment Officer Paradigm Group October 2013

3 Tatton IM – DFM overlay for model portfolios on platform The Tatton DFM takes over where model portfolios experience limitations No additional charge to clients on Paradigm Nucleus, +0.15% on Amber +0.30% on all other platforms

4 Tatton DFM – ‘über’ - competitive Comparison of DFM (on-platform) charges DFMAnnual fee* Incl. platform Tatton IM on Paradigm Nucleus050 Tatton IM on Amber Tatton IM on Transact and other platforms2560 Novia inhouse2580 Brewin Dolphin30 Vestra35 Standard Life Wealth36 Bestinvest40 Brooks McDonald Source: Citywire Wealth Adviser * fees shown are subject to VAT Tatton-DFM - ‘Über’ - competitive

5 Tatton DFM - from Live to LIFT-OFF

6 61 Partner firms signed up, representing… £543 million of target model AuM 41 firms submitting business 33 firms in sign-up 754+ client portfolios invested £45mn of Tatton portfolios invested £315mn total Tatton AuM, including Prism funds Tatton DFM Overlay – Growing rapidly

7 Tatton IM – 2013 portfolio activity OBSR to Tatton Active Managed OBSR 1.Exclusion of UK gilts (Jan 2013) 2.Exclusion of Japan from 20 May to 25 June, on valuation concerns 3.Ad-hoc rebalancing on 25 June after equity market falls 4.14 August rebalance for EM increase and realignment to Ibbotson 5.19 September shortening of duration of remaining bond holdings form ~ 5 to ~ 2 years 6.Merging of ISA and non-ISA variants

8 Tatton IM – Adding value: Income +1.4% Source: Morningstar

9 Tatton IM – Adding value: Balanced +1.6% Source: Morningstar

10 Tatton IM – Adding value: Aggressive +1.0% Source: Morningstar

11 Key points 1.Model portfolio DFM overlay for IFA and Hybrid/Restricted 2.Platform only – 50bps bundle only on Nucleus and Amber 3.OBSR, Vanguard and mixed models as basis 4.Avoidance of overvalued asset classes 5.Rebalancing and fund switches more regularly - without need for individual consent

Tatton Investment Management Market Update A function of confidence Lothar Mentel Chief Investment Officer Paradigm Group October 2013

13 25 year investment return perspective Bonds/Gilts falling back Source: Morningstar

14 The recovery so far – let’s recap Financial Crisis and the Great Recession Source: Morningstar

15 Stage 1 – The Shock– From over-confidence to no confidence Financial Crisis and the Great Recession 2008 / 2009 Source: Morningstar

16 Stage 2 – Intervention and Snap Recovery – Confidence regained Governments step in and save the system 1 st false start Source: Morningstar

17 Governments step in and save the system 1 st false start 2009 / 2010 Source: Morningstar Stage 2 – Intervention and Snap Recovery – Confidence regained

18 Stage 3 – Euro-crisis part I and QE1 – Doubts return Governments lose confidence themselves Source: Morningstar

19 Governments lose confidence themselves 2010 – Jan 2011 Source: Morningstar Stage 3 – Euro-crisis part I and QE1 – Doubts return

20 Stage 4 – QE + EU bail-outs build up confidence … short term Source: Morningstar Arab spring, Japanese tsunami, first Fiscal Cliff rekindle Euro crisis 2 nd false start

21 Stage 4 – QE + EU bail-outs build up confidence … short term Arab spring, Japanese tsunami, first Fiscal Cliff rekindle Euro crisis 2 nd false start 2011 Source: Morningstar

22 Stage 5 – ECB ‘Whatever it takes’ + relative ‘Quiet’ Self healing takes hold - 3 rd time lucky? Watch out for irresponsible US Republican politicians! Source: Morningstar

23 Stage 5 – ECB ‘Whatever it takes’ + relative ‘Quiet’ Self healing takes hold - 3 rd time lucky? Watch out for irresponsible US Republican politicians! 2012 / 2013 Source: Morningstar

24 Recovery in the hands of politicians Thank God US Congress avoided default at the 11 th hour!

25 Recovery in the hands of politicians Paradox: Budget deficit falling rapidly through GDP growth

26 Logic of the stock market recovery Confidence is now a very fragile commodity 1 st Recovery (2009) : Realisation that the world isn’t ending 2 nd Leg up (late 2010) : EU will bail out countries 3 rd Leg up (late 2012) : ECB will ‘do what it takes’  market recovery product of normalising confidence and QE money substituting confidence lacking investors  Company profits have grown through efficiency gains, not sales growth  If confidence returns permanently QE can be replaced and economies grow again

27 Equities not expensive, despite the rally PE ratios show equity valuations with upside potential Source: Bloomberg Developed western markets Emerging markets

28 Outlook: Positive but still vulnerable Follow our views in Tatton’s Weekly Comment Equity market will prevail now US deadlock has been postponed Confidence levels key to speed of further recovery Bonds will continue to fall This economic recovery has much, much longer to go before ‘overheating’

29 Time for a breakout? Possible, but not yet certain

30 Important notice Important Information This document is solely for the use of professionals and is not for general public distribution. This document is intended solely for the use of professionals, defined as Eligible Counterparties or Professional Clients, and is not for general public distribution. Past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested. Tax assumptions and reliefs depend upon an investor’s particular circumstances and may change if those circumstances or the law change. If you invest through a third party provider you are advised to consult them directly as charges, performance and terms and conditions may differ materially. Nothing in this document is intended to or should be construed as advice. This document is not a recommendation to sell or purchase any investment. It does not form part of any contract for the sale or purchase of any investment. Any investment application will be made solely on the basis of the information contained in the Prospectus (including all relevant covering documents), which will contain investment restrictions. This document is intended as a summary only and potential investors must read the prospectus, and where relevant, the key investor information document before investing. Issued in the UK by Tatton Investment Management Tatton Investment Management Ltd 4 Lombard Street, London EC2N 1AR Tel: