MANAGERS MONTHLY COMMENTARY

GROUNDHOGS AND HEDGEHOGS

JULY 2012

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 and former chairman of those committees at BWD Rensburg, he holds a MSC in Investment Analysis and is an Associate Member of the Society of Investment Professionals (ASIP).

For those who remember the film Groundhog Day, so was the Euro zone in July, long on rhetoric and short on action, more of the same. ECB President Draghi said that he would do whatever it takes to save the Euro. Investors needed no excuse to mark European equities materially higher, mindful of the action by the ECB late last year to boost liquidity through LTRO. We would caution against assuming a quick fix (Euro zone politicians seem to be prevaricateurs extraordinaire), or that the fix is certain. European markets are being driven by politics and not fundamentals and whilst that continues we are likely to remain absent. If you remember Draghis predecessor J-C Trichet said "Speculating on Greece defaulting is a certain way of losing out. Such a speculation would be a sure-fire way of losing money given the decisions taken last Thursday" (27 July 2011). Those who were short Greek 10 year bonds made a 70%+ return. Moreover, remember that conditionality was disavowed at the last EZ summit, only to see the Finns ask for, and receive, collateral as part of the Spanish bank bailout. Coincident events can be dangerous and there seem to be three which we feel are not priced into equities: First is the slowdown in China, where the consensus is a 2nd quarter trough for GDP. We are more circumspect both in the degree of the slowdown and the timing of recovery and. Should we be proven correct, a lower market may ensue toward the end of the 3rd quarter. Next, US earnings expectations are too high for 3rd & 4th quarter and will have to be revised downwards before the next earnings season (September). Concluding with our bte noire, the Euro zone, where the German constitutional court is not due to deliver approval on the ESM until 12 September. I would keep one eye open over the latter part of summer and September in particular. As if to reiterate the groundhog day nature of this market, our chart this month (courtesy of Soc Gens Albert Edwards) focuses on the S&P 500 index, comparing 2011 & 2012.

David Cowell
Chief Executive, possessing over 40 years experience in financial services, with over 25 years being investment management focussed. David formulates the macro economic position and leads the investment process across the portfolio range. He also has over 10 years experience of business consultancy to small and medium sized enterprises.

For further information call :

0113 274 7700

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

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.

A segue from groundhog to hedgehog I was in my garden and I came across a hedgehog a couple of weeks ago. Unusual, well yes, as I had not seen one for many years and it put me in mind of a quotation, which may be liberally translated. The fox knows many tricks but the hedgehog knows one big trick. (Archilochus) The hedgehogs one big trick being how to curl up into a ball, its spines making a virtually impregnable haven. We consider ourselves somewhat hedgehog-like, we adopt a defensive approach. This does not mean that we only own safe haven assets such as gilts, but that we look within the risky asset space toward investments which offer capital protection. This has led us to strongly overweight those companies which have fortress-like balance sheets, non-cyclical earnings and a focus on free cash flow generation. Since mid 2009 there has been a tug of war between improving companies results and the poor macro economic outlook; often the cause of rallies and corrections respectively. The economic tailwind that allowed investors to rightly point out the cheapness of shares in absolute terms compared to recent history and, in relative terms, to bonds, was due to the strong earnings growth in 2010/11. We consider that this tailwind has lost its puff and as seems likely 2012/2013 earnings will be pedestrian, with significantly more divergence between sectors and companies. Slow and steady growing hedgehog-like investments look likely to be the winners over a more vulpine approach focussed more on geared/cyclical investments. We have revamped our factsheets to be less wordy and more visual. Thanks to some positive feedback, we have changed the benchmark we were using to the IMA 20-60% & 40-85% equity sectors. Needless to say we continue to perform strongly. As always we appreciate your feedback and custom.

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.

MCIM Balanced Defensive Portfolio

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 and former chairman of those committees at BWD Rensburg, he holds a MSC in Investment Analysis and is an Associate Member of the Society of Investment Professionals (ASIP).

JULY 2012

PERFORMANCE SINCE LAUNCH

David Cowell
Chief Executive, possessing over 40 years experience in financial services, with over 25 years being investment management focussed. David formulates the macro economic position and leads the investment process across the portfolio range. He also has over 10 years experience of business consultancy to small and medium sized enterprises.

Model portfolios include cost of underlying investments and Myddleton Crofts annual management fees, but not the charges for custodian, dealing and settlement (equivalent to platform charges)

2012 PERFORMANCE

For further information call :

0113 274 7700

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

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. *Clients portfolios may differ from model portfolios dependent on their specific objectives.

ASSET ALLOCATION

11% 17%

18%

UK Equities International Equities Alternatives Commodities 22% UK Fixed Interest Global Fixed Interest Cash

7% 5% 20%

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.

MCIM Balanced Cautious Portfolio

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 and former chairman of those committees at BWD Rensburg, he holds a MSC in Investment Analysis and is an Associate Member of the Society of Investment Professionals (ASIP).

JULY 2012

PERFORMANCE SINCE LAUNCH

David Cowell
Chief Executive, possessing over 40 years experience in financial services, with over 25 years being investment management focussed. David formulates the macro economic position and leads the investment process across the portfolio range. He also has over 10 years experience of business consultancy to small and medium sized enterprises.

2012 PERFORMANCE
Model portfolios include cost of underlying investments and Myddleton Crofts annual management fees, but not the charges for custodian, dealing and settlement (equivalent to platform charges)

For further information call :

0113 274 7700

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

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. *Clients portfolios may differ from model portfolios dependent on their specific objectives.

ASSET ALLOCATION

9% 21% 16%

UK Equities International Equities Alternatives Commodities UK Fixed Interest 25% Global Fixed Interest Cash

6% 4% 19%

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.

MCIM Balanced Moderate Portfolio

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 and former chairman of those committees at BWD Rensburg, he holds a MSC in Investment Analysis and is an Associate Member of the Society of Investment Professionals (ASIP).

JULY 2012

PERFORMANCE SINCE LAUNCH

David Cowell
Chief Executive, possessing over 40 years experience in financial services, with over 25 years being investment management focussed. David formulates the macro economic position and leads the investment process across the portfolio range. He also has over 10 years experience of business consultancy to small and medium sized enterprises.

2012 PERFORMANCE
Model portfolios include cost of underlying investments and Myddleton Crofts annual management fees, but not the charges for custodian, dealing and settlement (equivalent to platform charges)

For further information call :

0113 274 7700

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

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. *Clients portfolios may differ from model portfolios dependent on their specific objectives.

ASSET ALLOCATION

8% 23% 15% 5% 4% 28% 17%

UK Equities International Equities Alternatives Commodities UK Fixed Interest Global Fixed Interest Cash

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.

MCIM Balanced Adventurous Portfolio

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 and former chairman of those committees at BWD Rensburg, he holds a MSC in Investment Analysis and is an Associate Member of the Society of Investment Professionals (ASIP).

JULY 2012

PERFORMANCE SINCE LAUNCH

David Cowell
Chief Executive, possessing over 40 years experience in financial services, with over 25 years being investment management focussed. David formulates the macro economic position and leads the investment process across the portfolio range. He also has over 10 years experience of business consultancy to small and medium sized enterprises.

2012 PERFORMANCE
Model portfolios include cost of underlying investments and Myddleton Crofts annual management fees, but not the charges for custodian, dealing and settlement (equivalent to platform charges)

For further information call :

0113 274 7700

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

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. *Clients portfolios may differ from model portfolios dependent on their specific objectives.

ASSET ALLOCATION

7% 14% 5% 3% 16% 30% 25%

UK Equities International Equities Alternatives Commodities UK Fixed Interest Global Fixed Interest Cash

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.

MCIM Balanced Highly Adventurous Portfolio

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 and former chairman of those committees at BWD Rensburg, he holds a MSC in Investment Analysis and is an Associate Member of the Society of Investment Professionals (ASIP).

JULY 2012

PERFORMANCE SINCE LAUNCH

David Cowell
Chief Executive, possessing over 40 years experience in financial services, with over 25 years being investment management focussed. David formulates the macro economic position and leads the investment process across the portfolio range. He also has over 10 years experience of business consultancy to small and medium sized enterprises.

2012 PERFORMANCE
Model portfolios include cost of underlying investments and Myddleton Crofts annual management fees, but not the charges for custodian, dealing and settlement (equivalent to platform charges)

For further information call :

0113 274 7700

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

MPORTANT 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. *Clients portfolios may differ from model portfolios dependent on their specific objectives.

ASSET ALLOCATION

5% 13% 4% 3% 15% 33% 27%

UK Equities International Equities Alternatives Commodities UK Fixed Interest Global Fixed Interest Cash

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.

MCIM Balanced Speculative Portfolio

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 and former chairman of those committees at BWD Rensburg, he holds a MSC in Investment Analysis and is an Associate Member of the Society of Investment Professionals (ASIP).

JULY 2012

PERFORMANCE SINCE LAUNCH

David Cowell
Chief Executive, possessing over 40 years experience in financial services, with over 25 years being investment management focussed. David formulates the macro economic position and leads the investment process across the portfolio range. He also has over 10 years experience of business consultancy to small and medium sized enterprises.

Model portfolios include cost of underlying investments and Myddleton Crofts annual management fees, but not the charges for custodian, dealing and settlement (equivalent to platform charges)

2012 PERFORMANCE

For further information call :

0113 274 7700

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

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. *Clients portfolios may differ from model portfolios dependent on their specific objectives.

ASSET ALLOCATION

1% 7% 2% 9%

4% 35%

UK Equities International Equities Alternatives Commodities UK Fixed Interest Global Fixed Interest

43%

Cash

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.

MCIM Enhanced Income Portfolio

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 and former chairman of those committees at BWD Rensburg, he holds a MSC in Investment Analysis and is an Associate Member of the Society of Investment Professionals (ASIP).

JULY 2012

PERFORMANCE SINCE LAUNCH

David Cowell
Chief Executive, possessing over 40 years experience in financial services, with over 25 years being investment management focussed. David formulates the macro economic position and leads the investment process across the portfolio range. He also has over 10 years experience of business consultancy to small and medium sized enterprises.

12 MONTH PERFORMANCE
Model portfolios include cost of underlying investments and Myddleton Crofts annual management fees, but not the charges for custodian, dealing and settlement (equivalent to platform charges)

For further information call :

0113 274 7700

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

The Enhanced Income Portfolio was launched at the beginning of 2011. It should be noted that the performance before that date (presented above) is from the back-tested portfolio and is provided for illustration purposes only.

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. *Clients portfolios may differ from model portfolios dependent on their specific objectives.

5% 5% 5% 15% 45% 5%

UK Equities International Equities Alternatives Commodities UK Fixed Interest

20%

Global Fixed Interest Cash

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.