Transcript Slide 1

Dynamic Tracker Securities
CLS Winter Conference 2014
Dynamic tracker securities
 Bespoke ETF like securities that allow you the discretionary to change the composition of the underlying
investments exposure.
 Can be linked to stocks, bonds, mutual funds, dividend futures…..combination of and hedge overlays.
 Like a fund, whilst the underlying investment exposure changes, based upon you the discretionary ’s
instructions, the security that investors hold remains the same.
 Unlike a fund, the costs and size constraints of issuing such a security are significantly lower with
denominations down to £1.
 There are advantageous tax benefits to executing stock strategies in this manner rather than as direct
investments or via a fund.
 You are accessing bank’s global execution and custody platforms. If they can trade and settle it, you can
access it.
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How do they work?
Asset construction
Basket
Returns
Basket
Returns
Security
Basket
Returns
Issuer
Stock
Basket
Bank physically purchases stock as a
hedge
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How do they work?
Asset construction
Revised Basket
Returns
Revised Basket
Returns
Security
Discretionary
Revised Basket
Returns
Issuer
Revised basket composition instructions
Stock
Basket
Bank adjusts its physical
stock holding, based
upon instructions
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Dynamic tracker securities in numbers
Costs comparison
Direct Investment - ISA / SIPP:
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1
Trading & SDRT 1.98%
Growth 5.00%
Total gross cost 2.52%
Potential Saving 2.17%
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0.58%
5.00%
0.70%
0.35%
3
0.58%
5.00%
0.67%
0.32%
4
0.58%
5.00%
0.63%
0.28%
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0.58%
5.00%
0.60%
0.25%
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0.58%
5.00%
0.58%
0.23%
2
1.52%
1.85%
1.50%
3
1.52%
1.76%
1.41%
4
1.52%
1.68%
1.33%
5
1.52%
1.60%
1.25%
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1.52%
1.52%
1.17%
Direct Investment:
Trading, SDRT, Div
Total gross cost
Potential Saving
1
2.92%
3.73%
3.38%
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Benefits of and to whom?
End Investor
Portfolio Manager
The Firm
 Lower TER
 Lower TER; better
performance
 Ability to strategically roll
out BPS to MPS style
clients
 Access BPS style stock
picking
 Efficient implementation of
BPS style stock picking
 Tax efficient
 Potentially access new
stocks
 Tax efficient; better
performance and can be
tailored to each investor
 Access to all stocks banks
can trade and clear
 Efficiency gains both in
terms of both PM and BO
time
 Potential savings for
custody costs and access to
new markets
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DISCLAIMER
The information in this document is derived from sources believed to be reliable but which have not been independently verified. Catley Lakeman Securities makes no
guarantee of its accuracy and completeness and is not responsible for errors of transmission of factual or analytical data, nor is it liable for damages arising out of any
person’s reliance upon this information. All charts and graphs are from publicly available sources or proprietary data. The opinions in this document constitute the
present judgment of Catley Lakeman Securities, which is subject to change without notice. This document is neither an offer to sell, purchase or subscribe for any
investment nor a solicitation of such an offer. This document is intended for the use of institutional and professional customers and is not intended for the use of private
customers. This document is not intended for distribution in the United States of America or to US persons. This document is intended to be distributed in its entirety.
No consideration has been given to the particular investment objectives, financial situation or particular needs of any recipient.
Catley Lakeman Securities is a LLP registered in England and Wales, Registered Office : One Eleven Edmund Street, Birmingham, B3 2HJ. Registration
Number: OC336585, FSA Reference: 484826
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