Stamford Associates

1. Introducing
OUR APPROACH TO
INVESTMENT
MANAGEMENT
AND THE
INVESTMENT
COMMITTEE

2. Contents
3 Foreword by Chris Ralph
4 The St. James’s Place Approach to Investment Management
7 The Investment Committee
8 Members of the Investment Committee
11 Stamford Associates Limited
12 The benefit to clients of investing with St. James’s Place
13 Our record

3. Foreword by Chris Ralph
Chief Investment Officer of St. James’s Place
Successful investment is critical to your future financial
wellbeing, but it is a field which presents a unique problem:
future performance is unpredictable.
A widely used method of assessing the quality of an investment manager
is to look at their previous performance; however this can only give
you part of the picture. Some of the best managers will occasionally
underperform the market over a short period and equally the worst
managers can sometimes achieve impressive performance. This
happened during the dot-com bubble when some managers looked
good for a while. Clearly past performance can provide no guarantee
of future performance.
Also consider that the manager who performed successfully in the past
may no longer manage the fund, having moved onto another fund or
left the company. It may also be that a management style which had
historically worked so well may not be right for current or future
market conditions.
As a result, when you choose someone to manage your money, no matter
how successful they have been in the past, how can you be sure that you
have made the right choice and that it will continue to be the right choice
in future years?
Crucially, what can you do to monitor the manager you have chosen and
to ensure that they are continuing to do a good job for you?
St. James’s Place adopts a radical and effective solution to this problem.
Recognising that no single investment house has a monopoly of
investment expertise, we do not employ any in-house managers. Instead,
we carefully select a number of external managers of outstanding ability
to manage our range of funds.
This document explains how you can benefit from this approach, as well
as the role of the St. James’s Place Investment Committee and Stamford
Associates – key elements which are at the heart of the St. James’s Place
Approach to Investment Management.
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4. The St. James’s Place Approach to
Investment Management
When it was formed in 1992 the St. James’s Place The work of the Investment
Wealth Management Group decided to take a radical Committee
and effective approach to investment management.
Our approach recognises that no single investment The St. James’s Place Investment Committee
house has a monopoly on investment expertise so focuses on:
we carefully select a number of external managers
of outstanding ability to manage our funds. 1. Selecting the best investment managers – which
includes careful examination of the people and
This has a number of advantages: procedures within a large number of investment
• It gives us the freedom to select first-class companies.
managers from the global investment market to 2. Continually monitoring those managers to ensure
manage our funds on behalf of our clients. they maintain the standards for which they were
• It enables us to change any of these managers selected – this process includes monitoring of both
at short notice if we have lost confidence their portfolios and their processes.
in them, without any charges, or tax, or
3. Changing managers if necessary – where
inconvenience to our clients.
St. James’s Place becomes unhappy with a
• It offers our clients a real opportunity to manager, it will remove that manager and appoint
diversify their investments by spreading their another to manage the fund. This is a seamless
money across funds managed by different transition to the new manager. There is no charge
managers with different styles. to investors and, as you still hold the same fund,
The St. James’s Place Investment Committee no tax consequences either.
‘manage the fund managers’ on your behalf. In order 4. Ensuring clients have an appropriate spread of
to achieve the objective of consistently generating investments by providing a comprehensive range
superior investment results, having selected the of Managed and Specialist funds – the managers of
best individuals within the appropriate investment these funds are carefully selected not only for their
company, the key is to monitor both the individuals quality but also to ensure that they have different
and the company they work for to ensure they remain styles of investment management.
appropriate for the fund that they are managing. If the
Committee loses confidence in a manager, they will
be replaced, quickly and efficiently. In carrying out
this task, the Committee is assisted by independent
investment consultants Stamford Associates.
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5. A distinctive approach to The funds available include Managed funds
investment management invested in a balanced portfolio of UK and
international equities as well as a range of more
Whilst many companies now offer a ‘multi-manager’ Specialist funds, including a range of income and
approach, the St. James’s Place approach remains growth options.
distinctive:
4. St. James’s Place chooses the managers for
1. Unlike most other companies, St. James’s Place only portfolios based on their skills in active
uses external investment managers for its funds. management rather than following a benchmark.
Whilst other companies will have an interest As pointed out by the Myners Report1
in directing as much business as possible to the commissioned by the Treasury, institutional
investment funds managed by the ‘in-house’ fund investment managers tend to invest the huge
managers they employ, in order to maximise their amounts of money they handle largely in line with
own profitability, St. James’s Place has no such market indices or industry benchmarks and many
conflict of interest or investment bias. other companies are content to follow this line.
St. James’s Place insists that its managers are truly
2. The Investment Committee of St. James’s Place
active rather than passive.
appoints and replaces managers on behalf of all of
its clients, ensuring no client is ‘left behind’. We 5. Clients of St. James’s Place have the peace of mind
do not wait to act if we have lost confidence in of knowing that investment manager changes are
a manager. implemented promptly and seamlessly.
This contrasts with the approach of many other There are no explicit charges for changing a fund
companies who simply try to provide access to manager since it is simply that the responsibility for
as many existing funds in the market as possible. managing the underlying assets has been handed
This leaves the individual investor with the over to a new investment professional who will
difficult challenge of having to decide which of then make their own adjustments to the portfolio.
the investment companies and funds they believe
is likely to produce the best results. Another important advantage is that there are no
capital gains or income tax implications involved
3. St. James’s Place offers a range of investment for investors in the change – this means that
styles that together provide a truly diversified longer-term wealth strategies are not disturbed by
portfolio for clients. unwanted taxable events.
1 Institutional Investment in the UK: A Review, Paul Myners, 2001
5

6. Investment management companies are asked by us If you, as an investor, are unhappy with a particular
to change the individual handling funds for the group manager, you can move money from that manager to any
or we may replace the manager and company when other within the St. James’s Place range of managers.
we no longer have confidence in the structure and This transfer will involve little or no charges for you
approach of the managers. and where you are invested in one of our life, pension
or overseas life funds, will have no tax consequences.
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7. The Investment Committee
The cornerstone of the St. James’s Place approach Monitoring includes direct presentations by the
to investment management is the St. James’s Place particular individuals who manage the funds at the
Investment Committee. The Committee’s role is to regular meetings of the St. James’s Place Investment
‘manage the fund managers’ on behalf of St. James’s Committee, giving members the opportunity to
Place clients. question the managers closely, as well as ongoing
monitoring of each portfolio. To enable the
Their overriding objective is to generate consistently Committee to fulfil its objectives it meets a minimum
superior investment results over the medium term by of six times a year, although this can increase
selecting the best individuals within the appropriate depending on market conditions.
investment company; monitoring both the individuals
and the company to ensure the Committee remain At each meeting the Committee will make crucial
happy with the choice, and changing them where decisions about the best way forward. It has four
necessary. The Committee does not seek to influence options:
the investment policy of the managers. Its aim is to • Leave the portfolio of managers unchanged
ensure success by selecting superior managers and because the Committee retains confidence in
holding them accountable for their performance. the way clients’ funds are being managed
In general, exceptional investors are able to perform • Retain the investment company but change
better than their peers over a wide range of market the manager – the departure of an individual
conditions by exhibiting skills in stock selection. manager may cause this to happen
The Investment Committee uses a range of tools to
• Change the investment company and manager
analyse and assess these skills. The aim is to avoid
because the Committee no longer has confidence
managers who periodically add value by betting on
in their ability to manage our clients’ funds
the direction of the market. The managers selected
by the Investment Committee typically take a • Introduce a new investment fund or strategy
‘bottom-up’ approach, looking at the fundamentals to give our investors greater opportunity or to
of individual stocks, rather than sectors or regions, improve performance prospects.
to identify quality investments. By identifying quality Based on our investment management approach
investments at a stock level, investment growth is and the work of the Investment Committee,
more likely to be repeatable as returns are less reliant St. James’s Place is able to offer our clients a
on the manager ‘winning’ their bet on the market or a diversified investment proposition where overall
particular area outperforming. risk control is achieved by the careful selection
The St. James’s Place Investment Committee closely and combination of managers pursuing different
monitors the management of each of the funds. investment disciplines across their respective
Whilst the Committee’s members possess a great deal asset classes. This strategy creates our investment
of expertise and knowledge, the breadth of available proposition that offers realistic scope to produce
managers from around the world necessitates a added value over time, belying the notion that low
dedicated research resource. The Committee is risk must result in low returns.
aided in this by the independent investment research
consultancy Stamford Associates.
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8. Members of the Investment Committee
The Committee’s responsibilities require a broad range of knowledge, skills and experience. As with any governing
body the Committee includes representatives who will bring independent expertise as well as experience in
representing the views of those who will ultimately be impacted upon by our fund performance - our investors.
The members of the Committee have been carefully selected to ensure all these requirements are met.
Sir Mark Weinberg
Chairman
Sir Mark Weinberg is President of St. James’s Place plc. He is also
Chairman of the Investment Committee of the London School of
Economics. He has previously held many key roles within the financial
services industry. In 1961 he founded Abbey Life Assurance and in
1970 Hambro Life Assurance.
He has also held senior positions within the industry’s regulatory
framework, including Chairman of the Stock Exchange Committee on
Private Share Ownership and Deputy Chairman of the Securities and
Investment Board.
Sarah Bates
Sarah has had a wide range of experience in the investment industry over
30 years and has held a number of high profile positions including joint
chief investment officer and head of investment trusts at Invesco Perpetual.
She is a non-executive director of Witan Pacific Investment Trust,
Invesco English and International Trust, New India Investment Trust
and JP Morgan American Investment Trust. As well as being a strategic
investment adviser to the Merseyside and East Riding Pension Funds
Sarah is also chairman of the Cancer Research campaign pension fund
investment committee and an adviser to The Royal College of Surgeons’
charitable fund.
In 2011 Sarah will become chairman of the Association of Investment
Companies (AIC) having been on the AIC board since December
2006 and deputy chairman since January 2008. Sarah was appointed
to the Investment Committee and Board of St. James’s Place plc in
September 2004.
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9. Vivian Bazalgette
Vivian was appointed to the St. James’s Place Investment Committee
in 2009. Vivian is currently an adviser to BAE Systems Pension Fund
and sits on the board of a number of investment trusts, including
Perpetual Income & Growth. He is also Vice Chairman of Governors
to Dulwich College.
Vivian’s investment career started in 1979 with James Capel before
moving on to Mercury Asset Management and then Gartmore
before becoming M&G’s Chief Investment Officer; and subsequently
Prudential’s following their takeover in 1999. He continued to hold
the post until 2002, stepping down to pursue other interests.
Peter Dunscombe
Peter was also appointed to the St. James’s Place Investment Committee
in 2009. Peter is the Head of Pensions Investments at the BBC where he
advises the trustees on investment strategies, portfolio development and
appointing new investment managers.
Educated at Oxford, Peter began his investment career with Simon &
Coates in 1971. In 1975 he joined Imperial Investments progressing to
become Joint Managing Director of the pension fund. His responsibilities
covered investment strategy, manager selection, monitoring, portfolio
management and compliance.
Michael Sorkin
Michael was appointed to the St. James’s Place Board as an independent
non-executive director in January 2002. He was appointed Senior
Independent Director in May 2005 and is Chairman of the Remuneration
Committee and a member of the Nomination and Audit Committees.
Michael joined the Investment Committee in 2007.
He joined Hambros Bank in 1968, was a director of Hambros PLC
between 1986 and 1998 and a managing director of S G Hambros from
1998 to 2001. He is Vice Chairman of Investment Banking at N M
Rothschild Corporate Finance Limited and a non-executive director
of J Z Equity Partners PLC.
9

10. Members of the Investment Committee continued
Senior members of the St. James’s Place Wealth Management Group also sit on the Committee, bringing a wealth
of investment experience from extensive careers in the financial services and fund management arenas:
David Lamb Andrew Croft
Business Development Director Finance Director
David joined St. James’s Place in 1992. He is Andrew joined St. James’s Place in 1993 and was
responsible for developing the Group’s Wealth appointed Finance Director in 2004. He qualified as
Management proposition and fund range. He was a Chartered Accountant in 1988 and has a degree in
appointed to the Board in December 2007. David is Accounting and Economics from The University of
a graduate of City University, London and a Fellow Southampton. He is a trustee of the St. James’s Place
of the Institute of Actuaries. Foundation.
Chris Ralph Andrew Humphries
Chief Investment Officer Executive Director, Asset Management
Chris joined St. James’s Place in 2009. After joining Andrew joined St. James’s Place in 2003 and has
Cazenove & Co in 1984, specialising in convertible responsibility for the distinctive multi-manager
bonds, Chris subsequently worked with S.G. Warburg investment approach. Andrew graduated from The
and NatWest Markets becoming recognised as a University of York with an economics degree. Prior
market leader in analysis in the income fund sector. to joining St. James’s Place, Andrew spent 20 years
He joined Fidelity to undertake peer group fund in the City of London working in a variety of
manager analysis leading to building a specialist team investment and business development roles within
responsible for the manager selection process. Most the financial services sector including various roles
recently he was involved in the launch of a new at Prudential and GE Capital.
multi-manager boutique.
Report of the Investment Committee
This is an annual report detailing the decisions made by the Investment Committee during the previous year. It
also highlights the goals and objectives which our Investment Committee has for the future and reiterates the roles
which they and the independent investment research consultants, Stamford Associates, play in achieving those goals.
A copy of the latest Report of the Investment Committee can be obtained from your St. James’s Place Partner.
10

11. Stamford Associates Limited
Stamford Associates is a leading international “Identification of likely future performance
investment research consultancy. It was established requires highly sophisticated and time-intensive
in 1984 in London and is authorised and regulated analysis of performance data and fund managers’
by the Financial Services Authority. Its aim is styles. Only a tiny minority of consumers have
to provide superior-quality services to deliver access to this sort of analysis. Yet without doing
intelligent investment solutions for its clients. so, simply looking at past performance is of
Stamford Associates has been closed to new business minimal value.”
for six years and it concentrates its entire resource
As an independent consultancy, Stamford Associates
to servicing a small number of institutional clients
is able, in fulfilling its research and monitoring
amongst which St. James’s Place is unique, being
role for the Investment Committee, to analyse and
the only provider of wealth management solutions
compare the portfolio activities of managers as well
to private individuals. It has a dedicated team that
as other pertinent data with complete objectivity.
has a wealth of experience encompassing asset
This is something which is not easy to do where the
management, portfolio analysis, performance
portfolios being monitored include funds managed
measurement, behavioural finance and investment
by a company’s own investment department – or, as
consultancy.
is sometimes the case, where that department is itself
Stamford Associates is totally independent of responsible for the monitoring.
St. James’s Place and, like our external fund
Stamford Associates’ philosophy is that superior
managers, is under contract to us to provide a
investment decisions are made by individuals rather
range of investment consultancy services. Stamford
than the companies they work for and it always
Associates’ assessment of managers is based on its
looks to the individual rather than the company in
close day-to-day involvement in the investment
recommending a manager. Even where St. James’s
industry rather than on investment performance
Place makes use of a large fund management
tables which can be of limited value. Their task is
company, it insists that its portfolio is handled by the
to work with the Investment Committee to
particular individual in whom Stamford Associates
help achieve its objective of generating superior
and the Investment Committee have confidence.
investment results over time.
Stamford Associates’ forward-looking philosophy
aims to achieve superior investment results by
applying a fundamentally driven investment discipline
and through identifying exceptional investment
professionals. They provide highly specialised skills
that would not normally be available to private
clients or trustees but which are essential if investors
want to aim to achieve superior performance – a
point highlighted in a report commissioned by the
Government to investigate the UK savings and
investment market1.
1 Sandler Review: Medium and Long-Term Retail Savings in the UK
11

12. The benefit to clients of investing with
St. James’s Place
Every client who invests with St. James’s Place will Since the start of the relationship with St. James’s
automatically benefit from the highly specialist skills Place in 1999, Stamford Associates has advised the
that Stamford Associates provides, which ordinarily Investment Committee on 29 fund manager and
private individuals or advisers would not be able to investment mandate changes. Whilst this clearly
access. If this level of monitoring were not available demonstrates a robust approach to the monitoring
how would you know when a particular manager of our independent fund managers and the need for
within an investment company has been taken off change, it is not change for change’s sake.
their fund in order to start a new fund, or has perhaps
Our approach to investment therefore means that all
left the company altogether? How would you know if
of our clients benefit from the sophisticated analysis
the key analysts in the organisation who supplied the
provided continuously by Stamford Associates through
manager with the good ideas have left the company?
the services it offers to St. James’s Place.
Whenever Stamford Associates recommends a
This has significant strategic benefits for investors and
manager there is conscious risk control through
brings peace of mind to our clients, as the individuals
consideration of how the manager will combine
responsible for managing our funds are being
with our other managers. By using individuals with
continuously monitored by full-time professionals.
different investment approaches you benefit from
diversification of management style.
12

13. Our record
Outlined below are recent examples of decisions made by the Investment Committee. Sometimes the decision
is not to replace a manager, even if there has been deterioration in performance in the short term. In a situation
like this, the Committee takes the view that the manager’s strategy over the longer term remained valid. In
the Committee’s view, good investment managers formulate a strategy in advance of something happening as
opposed to following fashionable trends. In turn, this can lead to considerably better long-term performance.
Date Change Notes
January 2007 Cautious Managed Funds The Committee felt strengthening the lower risk part of the
Jupiter Asset Management fund range was important. A Managed fund combining
appointed to manage the new equities and fixed income provided a lower risk investment
funds with Ian McVeigh as opportunity.
lead manager.
January 2007 Worldwide Managed Funds The Committee identified the opportunity to strengthen the
Bernard Horn of Polaris Capital global equity offering. Bernard Horn represented a seasoned
Management appointed to US investment professional with a contrarian style based on
manage the new funds. extensive fundamental research.
January 2007 UK Growth Funds To complement the value style of some of our UK equity
John Innes of RWC Partners managers the Investment Committee appointed John Innes
appointed to manage the new with his highly growth-orientated approach to UK equity
funds. investing.
October 2007 Continental European Fund Following a number of senior-level departures from BIAM
BIAM is replaced by Stuart the Committee decided to appoint Stuart Mitchell to succeed
Mitchell of S.W. Mitchell the incumbent managers. Stuarts’s concentrated all-cap
Capital. approach and consistent performance has served investors
well over the medium term.
October 2007 Diversified Income Funds In deciding to strengthen the UK equity income part of our
George Luckraft of AXA fund range the Committee appointed George Luckraft of
Framlington appointed to AXA Framlington, an established and renowned equity
manage the new funds. income manager. In discussions with George, the Committee
decided to focus on a small/mid/large cap mandate different
to other mandates he manages for other UK investors.
April 2008/ Corporate Bond Funds Following a fundamental review of the investment objectives
April 2009 Appointed Paul Causer and and parameters of SJP fixed income funds, Invesco Perpetual
Paul Read at Invesco Perpetual were appointed to manage the Corporate Bond funds for
to replace Wellington. St. James’s Place. This was followed a year later with the
launch of an Investment Grade Corporate Bond fund also
managed by Paul Causer and Paul Read.
13

14. Date Change Notes
April 2008 High Octane Funds Client requests led the Committee to investigate the
Jointly appointed Richard opportunities for a concentrated aggressive portfolio to take
Oldfield of Oldfield Partners advantage of global equity opportunities resulting in the High
and Vin Walden of Thornburg Octane mandate. The managers’ experience of concentrated
Investment Management to portfolios and differing approaches led to a joint appointment.
manage the new funds.
August 2008 Alternative Assets Funds In response to the developing investment landscape and
Appointed BGI (now investors’ search for investments not correlated to traditional
BlackRock) to manage the equity markets, the Committee appointed BGI (now
new funds. BlackRock) to manage a portfolio of diversified alternative
asset classes.
September 2009 Greater European Funds Following a detailed review, the Investment Committee
Appointed Burgundy Asset concluded that THS Partners’ investment process and
Management and S.W. Mitchell philosophy was best suited to diversified global equity
Capital to replace THS Partners. investing, rather than the narrower geographic mandates of
the UK and European portfolios. The review reinforced the
September 2009 UK & General Committee’s comfort in THS’s ability to continue managing
Progressive Fund the THSP Managed funds and International Unit Trust. Joint
Appointed Liberty Square Asset managers on each fund provided for diversification of
Management and J O Hambro investment styles.
Capital Management to replace
THS Partners.
April 2010 Global Emerging The continued development of emerging economies presented
Markets Funds the opportunity for a new fund which could achieve
Appointed Jonathan Asante at diversification across a number of markets.
First State to manage the new
funds.
April 2010 Absolute Return Funds Recognising our clients’ desire to achieve greater
Mark Lyttleton and Nick diversification and less correlation to equity markets the
Osborne at BlackRock Committee appointed Mark Lyttleton and Nick Osborne
appointed managers of the as managers of the St.James’s Place UK Absolute
new funds. Return Funds.
April 2010 International Corporate As an alternative to the Absolute Return Fund and, to provide
Bond Funds higher income returns, at a lower risk level, the Committee
Appointed Jill Fields and Zak appointed Babson Capital to manage the International
Summerscale of Babson Capital Corporate Bond Funds.
to manage the new funds.
October 2010 UK & International Recognising the need for further diversification through
Income Funds overseas exposure within the income fund range, the
Appointed Adrian Frost and Committee appointed Adrian Frost and Adrian Gosden of
Adrian Gosden of Artemis Artemis Investment Management to manage the UK &
Investment Management to International Income Funds.
manage the new funds.
October 2010 Global Managed Funds Following an intensive and comprehensive review of this
Appointed Artisan Partners to mandate, the Investment Committee recommended a change
replace Newton. of investment manager from Newton to Dan O’Keefe and
David Samra of Artisan Partners. The name of the funds
changed from ‘Newton Global Managed’ to ‘Global Managed’.
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16. OUR APPROACH TO
INVESTMENT
MANAGEMENT
AND THE
INVESTMENT
COMMITTEE
Members of the St. James’s Place Wealth Management Group are authorised and regulated by the Financial Services Authority.
The St. James’s Place Partnership and the title ‘Partner’ are the marketing terms used to describe St. James’s Place representatives.
St. James’s Place Wealth Management Group plc.
Registered Office: St. James’s Place House, 1 Tetbury Road, Cirencester, Gloucestershire, GL7 1FP, United Kingdom.
Registered in England Number 2627518
www.sjp.co.uk
SJP917-VR22 (10/10)