capital protected portfolios

C A P I TA L P R O T E C T E D P O R T F O L I O S
ABOUT US
Blackfinch is an established UK provider of tax-efficient
investment solutions. Our philosophy is based on
transparency and simplicity. Our services provide real
solutions to real financial planning challenges faced by
individuals today.
Blackfinch’s origins go back to 1992, meaning that we
have more than 20 years’ experience of trading in the UK
investment markets. During this time, our products and
investment solutions have evolved to suit the challenges
faced by investors as regulations and markets change.
As the economic climate has shifted, we have adapted
and strengthened to ensure that our investment solutions
remain tax-efficient, transparent and compelling. Throughout
this evolution, we have grown in partnership with our
clients and their professional advisors, and now have in
excess of £500 million of assets under administration.
CONTENTS
PAGE
ABOUT US
2
AIM HIGHER, FEEL SAFER
3
THE BLACKFINCH SOLUTION
4
PORTFOLIO HIGHLIGHTS
5
HOW IT WORKS
6
INVESTMENT PERFORMANCE
8
INVESTMENT PROCESS
9
RISKS
10
IMPORTANT INFORMATION
11
2
AIM HIGHER, FEEL SAFER
At Blackfinch, we know that many investors want to preserve their
capital and avoid volatility and risk. It could be uncertain markets that
concern you. Perhaps you have suffered losses in recent years. Or you
could be at a point in your life where you need more security.
Avoiding risk can be comforting but it can also erode
your wealth, with inflation remaining well above the
returns on cash-based investments.
Blackfinch’s Capital Protected Portfolios could be the
answer. We recognise your need for a secure investment
solution, which offers:
— Capital protection to preserve your wealth
— Competitive, risk-adjusted returns
— Low volatility
— The potential to outperform cash and other
low-risk investments
— Transparency of underlying assets
— Investment terms to allow you to plan your
future capital requirements
— Low fees
— Protection under the Financial Services
Compensation Scheme (FSCS)
With our Capital Protected Portfolios, you benefit from a
growth strategy that targets competitive returns as well as
high levels of capital protection and risk management, giving
you a compelling way to preserve and enhance your wealth.
3
THE BLACKFINCH SOLUTION Our Capital Protected Portfolios are flexible and innovative, providing
you with a secure investment solution. We construct transparent
portfolios that suit your personal requirements, using real assets to
generate competitive returns while giving you security and protection.
By investing in the Blackfinch Capital Protected Portfolios,
you acquire assets that benefit from attractive built-in
guarantees. These assets are usually purchased at a
discount to their real value and are managed by the UK’s
leading life assurance companies who have a history of
long-term performance and financial strength.
Our portfolios balance risk and return by holding assets
that gain exposure to every major asset class. This can
generate a stronger return than many cash-based options,
as well as delivering high levels of capital protection and
risk management.
TERM
TARGET RETURN
MINIMUM CAPITAL
PER ANNUM
PROTECTION
4 Year +
5.00%
75%
5 Year +
5.50%
75%
6 Year +
5.75%
75%
7 Year +
6.00%
75%
We administer the underlying assets for the duration of your
investment term, at the end of which you collect the proceeds.
It is a simple process, made easy for you by Blackfinch.
Note: The above table highlights the target returns and the minimum
capital protection levels for each given term of investment into the
Blackfinch Capital Protected Portfolios. These are forecast returns, based
on current performance levels, and you may receive less than this amount.
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PORTFOLIO HIGHLIGHTS
CAPITAL PROTECTION
LIQUIDITY
— A ll portfolios are constructed with a minimum
75% capital protection from inception.
— The underlying assets contain ring-fenced guarantees
and the level of protection will usually increase
throughout the term.
— The capital protection is provided at no extra cost to you.
— If you need access to capital, you can surrender the
assets to the life assurance company that issued them.
We help you with this and can typically make the
monies available to you in two to three weeks.
Surrender values may not represent the full market
value and we recommend that policies are held until
maturity (see Liquidity Risks on page 10).
PERFORMANCE
RETIREMENT PLANNING
— The portfolios target competitive risk-adjusted returns
of between 5% and 6% per annum, with low volatility.
— The investments gain access to all major asset classes
including equities, fixed interest and property, which
would normally be associated with more volatile and
higher risk strategies.
— The returns are based on the asset performance with
no leverage.
— Portfolio assets are allowable investments in Self Invested
Personal Pensions (SIPPs) and Small Self Administered
Schemes (SSASs).
— The portfolios offer an ideal drawdown solution, as the
capital protection preserves the value of your fund, while
above-inflation returns can deliver income or growth.
— The portfolios are also suitable for generating growth
during the accumulation stage of retirement planning.
REASSURANCE
FEES
— The portfolios hold assets from some of the world’s
largest and most secure financial institutions.
— Direct ownership of the assets places you in control,
removing broker default risks and fund-based risks,
such as a run on the fund.
— Portfolio assets are regulated by the FCA and benefit
from FSCS protection (90% of the claim with no
upper limit).
— We charge no initial fee for setting up your portfolio.
— There is a 0.5% annual processing fee for administering
your portfolio.
— At your request, we can facilitate any upfront or
ongoing advice fees that you have agreed with your
FCA authorised advisor.
TRANSPARENCY
— We provide you with full visibility of the assets in
your portfolio and the amount of capital protection
that each asset contains.
— You will be given clear details of how we will manage
your portfolio, as well as any fees and charges.
5
HOW IT WORKS
We create our portfolios with protection at the forefront,
utilising the exceptionally high and robust protection
mechanisms inherent in the assets.
The assets are carefully selected with-profits Traded
Endowment Policies (TEPs). These give exposure to the
strongest UK life assurance companies and carry high
levels of capital protection.
The inherent policy guarantee is made up of the original
sum assured and the annual bonuses that have built-up
during the policy term. This guarantee is locked in and
often represents a high proportion of the policy value.
We also do not employ any leveraging..
We administer your portfolio by paying the premiums
until the policies mature, ensuring you receive the full
benefit when they do. We account for the future premiums
when we create your portfolio and hold monies securely
on your behalf, in our FCA-regulated client account.
From the moment you invest in a Blackfinch Portfolio,
the administration is in our expert hands. We handle the
process smoothly and efficiently through to maturity.
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SIX YEAR PORTFOLIO EXAMPLE
AMOUNT
FORECAST
INVESTED
DISTRIBUTION
Policy Purchase
Capital Protection
£70,169
Held in Client Account £12,629
Variable Payout
£51,281
Total Investment
Total Repayment
£121,450
£75,218
£87,848
LIFE
POLICY MATURITY
PURCHASE TOTAL REMAINING SUM
ACCUMULATED
FORECAST
COMPANY
TERM
DATE
PRICE
PREMIUMS
ASSURED
BONUSES
MATURITY VALUE
General Accident
30
14/06/2018
£24,025
£2,097
£10,280
£11,613
£36,100
Norwich 30
Union
15/01/2019£14,450
£2,029
£8,823 £4,646
£23,550
Standard 30
Life
23/02/2019£6,493
£818
£3,510
£2,344
£10,550
Friends provident
01/03/2019
£5,227
£23,350
£5,602
£51,250
25
NUMBER OF POLICIES: 4
£30,250
£75,218 £10,171
£45,963£24,205
£121,450
This example portfolio does not include any deduction for your advisor’s fees and is for is for illustrative purposes only.
These are forecast returns, based on current performance levels, and you may receive less than this amount (see Values
and Returns risks on page 10).
— This example is based on an investment of
approximately £88,000.
— The variable payout is the expected future bonuses,
based on current bonus rates and maturity values.
— A round £75,000 is used to create a diversified portfolio
of four policies, with the remainder of the money held
securely in our client account.
— Blackfinch administers the policies, paying the
future premiums and fees from the capital held in
the client account.
— The sum assured and the accumulated bonuses at the
date of investment total £70,169, representing 80%
capital protection.
— The forecast maturity value is £121,450, representing
a portfolio yield of 5.8% per annum (the maturity value
is paid to you as the policies mature).
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INVESTMENT PERFORMANCE
TEPs’ underlying performance is generated by the life assurance
companies’ with-profits funds, in which the policies are invested.
These funds are characterised by increased stability and reduced
volatility, due to the life companies’ smoothing techniques, which
enable the policies to perform more predictably in volatile markets.
The underlying with-profits funds give you exposure to all
major asset classes, while the inherent policy guarantees
are a barrier to downside performance. This is useful in
periods of high inflation and when markets are volatile.
The illustration below shows the asset mix of withprofits funds that our portfolios typically invest in,
as at 31 December 2012.
TOTAL
PROPERTY
FIXED
OTHER
EQUITIES
NORWICH UNION 40.1 19.3 37.03.6
CLERICAL MEDICAL 39.3 19.1 36.05.6
FRIENDS PROVIDENT 36.7 10.2 49.23.9
ROYAL LONDON 46.2 37.9 14.61.3
PRUDENTIAL 34.0 12.0 44.010.0
INTEREST
Source: Money Management April 2013
We purchase policies usually at a discount to their true
asset value, at a point in their investment term when a
large proportion of their value is protected. This gives you
an excellent chance to benefit from a strong risk-adjusted
return, by holding the policy to maturity.
Blackfinch typically buys policies with terms of 20
years or more and with four to eight years remaining
until maturity, as these represent the best long-term
value. We can select from a huge range of policies, which
is a testament to our established market position. Our
expertise enables us to select the best policies to suit
your specific requirements.
8
INVESTMENT PROCESS
SEND THE FOLLOWING SIGNED AND COMPLETED
DOCUMENTS TO BLACKFINCH, TOGETHER WITH
Here is a simple diagram to show how
investing in the Blackfinch Capital
Protected Portfolios works. If you have any
questions, please speak to your financial
advisor, or call us on 01684 571 255.
YOUR INVESTMENT CHEQUE.
— Application Form
(with certified identification documents).
— Terms of Business.
— Administration and Service Agreement.
Please make cheques payable to
‘Blackfinch Investment Solutions Ltd.’
BLACKFINCH WILL PROCESS YOUR
APPLICATION AND PLACE YOUR MONEY
IN A CLIENT BANK ACCOUNT.
— We manage and protect the client account in line
with FCA rules.
— No interest is paid on this account.
WHEN THE PAYMENT HAS CLEARED, WE WILL
START TO CONSTRUCT YOUR PORTFOLIO. THIS
WILL TAKE APPROXIMATELY FOUR TO SIX WEEKS.
— We deduct and pay out any upfront advice fee you
agreed with your financial advisor.
— We identify policies that meet the requirements you
set out in your Application Form.
— Once clear title on the policies is confirmed, we
complete the purchase and register the policy deeds
with the life assurance company.
— We hold an amount in the client account to pay the
remaining premiums on your policies, the on-going
advice fees to your advisor and our cumulative
annual processing fee.
WE SEND YOU A COMPLETION PACK,
WHICH WILL INCLUDE:
— Confirmation of your portfolio details and
policy schedules.
— Executed contracts to confirm policy purchases.
— Copy documents (Terms of Business
/ Administration and Service Agreement).
— A refund cheque for any non-invested amounts.
9
RISKS
This investment may not be suitable for all investors and we recommend
that you seek independent financial advice before making a decision.
Blackfinch Capital Protected Portfolio invests in non-leveraged Traded
Endowment Policies (‘TEPs’). All policies and portfolios of policies are
sold on an execution-only basis to new investors, who become the TEPs’
beneficial owners.
You should carefully consider the following risks in relation
to the Blackfinch Capital Protected Portfolios, together with
all other information contained in this brochure. The
information set out below is not an exhaustive summary
of the risks affecting the Blackfinch Capital Protected
Portfolios. You should carefully consider whether an
investment in the Blackfinch Capital Protected Portfolios is
suitable for you, in light of your personal circumstances.
In particular, you should consider the following:
VALUES AND RETURNS: No representation is or can
LIQUIDITY: As you take direct ownership of the TEPs
be made as to the future performance of the Blackfinch
Capital Protected Portfolios or that the Blackfinch
Capital Protected Portfolios will receive the level of
returns contained in this Brochure. The assumptions
are assumptions only, a change in any of which could
adversely affect returns. This means that your capital is at
risk and you might not get back the full amount invested.
Past performance should not be regarded as an indication
of the future performance of investments in TEPs.
in your portfolio, you have the option at any point to
surrender some or all of the policies to the life assurance
companies who issued them. Please be aware that if you
surrender a policy, the life assurance company can apply
a discount to the policy value. This will usually result in a
loss, as the surrender value you receive will not represent
the full market value. We therefore recommend that you
hold the policies until maturity.
TAXATION: Any changes to the taxation environment or
HM Revenue & Customs’ practice may affect investment
returns. Accordingly, you will have your own tax position
to consider and must take your own independent
professional advice in this matter.
The process to surrender a policy normally takes two
to three weeks from your request to receipt of funds.
Blackfinch will manage this process and repay the
proceeds to you, minus an exit administration charge
of 6 months of the annual administration fee.
CONFLICTS OF INTEREST: Blackfinch Capital
Protected Portfolios will purchase TEPs from multiple
UK market makers. In some instances this will involve
acquisitions from the market makers LSA Endowments
and Neville James, which are both within the same group
of companies as Blackfinch Investment Solutions Ltd.
PROSPECTIVE INVESTORS SHOULD READ THIS
BROCHURE IN ITS ENTIRETY AND FULLY
UNDERSTAND THE RISKS INVOLVED BEFORE
DECIDING WHETHER OR NOT TO INVEST.
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IMPORTANT INFORMATION
This Brochure is being issued by Blackfinch Investment
Solutions Limited, which is authorised and regulated by
the Financial Conduct Authority (“FCA”) (FCA number:
153860). Registered Address: LSA House, Chequers
Close, Malvern, Worcestershire, WR14 1GP. Any decision
to invest in this service should be made on the basis of the
information contained in this Brochure, and the terms and
conditions. Prospective Investors must rely on their own
examination of the legal, taxation, financial and other
consequences of investing and the risk involved.
Prospective Investors should not treat the contents of
this Brochure as advice relating to legal, taxation or other
matters and, if in any doubt about the proposal discussed
in this brochure, its suitability, or what action should be
taken, should consult their own professional advisers.
Whilst Blackfinch Investment Solutions Limited has taken
all reasonable care to ensure that all the facts stated in this
Brochure are true and accurate in all material respects,
and that there are no other material facts or opinions
which have been omitted where the omission of such
would render this Brochure misleading, no representation
or warranty, express or implied, is given as to the accuracy
or completeness of the information or opinions contained
in this Brochure and no liability is accepted by Blackfinch
Investment Solutions Limited, or any of their directors,
members, officers, employers, agents or advisers, for any
such information or opinions.
All statements of opinion and/or belief contained in this
Brochure and all views expressed and all projections,
forecasts or statements relating to expectations regarding
future events represent Blackfinch Investment Solutions
Limited’s own assessment and interpretation of
information available as at the date of this Brochure
(July 2013).
This Brochure does not constitute, and may not be used
for the purposes of, an offer or invitation to treat by any
person in any jurisdiction outside the United Kingdom.
This Brochure and the information contained in it are
not for publication or distribution to persons outside the
United Kingdom. It does not constitute a public offering
in the United Kingdom.
The Blackfinch Capital Protected Portfolios may not be
suitable for all investors and we would recommend that
prospective investors seek independent advice before
making a decision.
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