Important Investor Information

The content of this document does not fully disclose all risks and other traits that are associated with your investment products and services. You should seek further advice if required in order to satisfy yourself that you fully understand the risks which apply to such investment products and services.

Rowan Dartington may not be able to provide you with advice on some of the investments detailed within the below information. We may not be able to offer all the investments listed below so should you wish to invest, you should contact your Rowan Dartington Investment Manager. Investments and services that we advise on and provide are aimed at retail investors.

All financial instruments and services convey a degree of risk. The types of risk that might apply will depend on various matters, including how any relevant product instrument or service agreement is created or drafted. Different instruments involve different levels of exposure to risk.

Where you wish us to execute a transaction on an execution only basis this will only be possible for products/instruments classed as non-complex (as defined by legislation). Where a product or instrument is classed as complex, we will need to undertake an appropriateness test to ascertain your knowledge and experience. Following this assessment, we reserve the right to refuse to undertake the transaction where we do not believe this will be in your best interest based on the information provided.

Rowan Dartington believe that holdings in virtual currencies including BITCOIN, either directly or via a wrapper such as an Exchange Traded Fund (ETF) should be considered as highly speculative. We therefore reserve the right to refuse a request for trading in these types of financial instruments.

This page and its content is only information and you should not rely on this as a personal recommendation or investment advice based on your personal circumstances. It does not constitute a recommendation to enter into any investment service or invest in any investment product.

You should not invest in any investment product or agree to receive any investment service unless you understand the nature of the contract you are entering into and the extent of your exposure to risk. You should also be satisfied that any product or service is suitable for you in light of your financial position and investment objectives and, where necessary, you should seek appropriate advice in advance of making any investment decisions.

Rowan Dartington do not currently offer all the investment types detailed below. If you are interested in investing in a particular investment then please contact your investment manager who will be able to confirm what we currently offer.

 

Discretionary and Advisory Managed Services

A discretionary managed service is available for those who wish to leave the investment management to Rowan Dartington. Up front, we will agree a mutually acceptable mandate and manage your investments in line with this. You would have nothing to do apart from agreeing your investment policy with us.

You might prefer us to offer the same level of investment management and administration, except that you make the final decision on the individual purchases and sales. This is called our advisory managed service.

Both offerings provide you with an all-inclusive portfolio management service, as well as a wide range of value added services such as capital gains tax management, periodic valuations and regular suitability reviews (if applicable).

With both services, we will discuss and agree your investment objectives and requirements with you in advance. This will formulate the mandate and guidelines that your investment portfolio will be managed to. Investment decisions or recommendations are then made within these guidelines which are reviewed periodically.

Both services provide you with regular periodical valuations and you will be able to review your portfolio at any time using our secure online portal.

 

Advisory Dealing Service

Some clients prefer to make their own investment decisions with the assistance of advice from Rowan Dartington. Under this service, clients will receive advice on a stock by stock basis only, rather than within the framework of a managed portfolio. Our advisory dealing service will provide you with recommendations based on individual investments researched by our own in-house team of analysts. Your portfolio under this service offering is not being managed and so any advice will be based on your chosen risk appetite/objective and existing investments whilst avoiding any areas which you do not wish to invest in.

The service will give you access to your very own stockbroker who will pro-actively provide you with advice and ideas. Your stockbroker will be supported by a dedicated team of individuals who will assist.

Execution Only Dealing Service

If you are comfortable making your own investment decisions, with no advice from Rowan Dartington, then our execution-only dealing service should be exactly what you are looking for. No advice or recommendations are offered, although factual information such as share prices and market activity will be given on request.

Where you wish us to execute a transaction on an execution only basis this will only be possible for products/instruments classed as non-complex (as defined by legislation). Where a product or instrument is classed as complex, we will need to undertake an appropriateness test to ascertain your knowledge and experience. Following this assessment, we reserve the right to refuse to undertake the transaction where we do not believe this will be in your best interest based on the information provided.

Instrument Types

Equity Instruments - General

When you buy or subscribe for equities issued by a company, you are buying a part of that company thereby becoming a stakeholder in the company.

When buying shares, you are aiming for capital growth and/or dividend income over the period you hold the investment. How much growth you obtain will depend on the value of the company and its profitability and earnings growth.

A risk of holding shares is that the company must both grow in value and, if applicable, grow the dividend it elects to pay to its shareholders. If the company does not achieve this or make adequate dividend payments, the share price may fall. The company’s performance may deteriorate in relation to its competitors, leading to further reductions in the share price.

Shares are a relatively volatile asset class and prices can go up and down more than other classes. Other risks which are outlined later in this document may apply.

If a company goes into liquidation, shareholders rank behind the company’s creditors (including its subordinated creditors) in relation to the realisation and distribution of the company’s assets. The end result is that a shareholder will typically only receive money from liquidators once all of the creditors of the company have been paid in full.

Ordinary Shares

Ordinary shares are issued by companies as the primary means of raising risk capital. Under legislation, the issuer has no obligation to repay the original cost of the share, or the capital, to the shareholder until the issuer is wound up or liquidated. The underlying issuer may issue dividend payments to qualifying shareholders. Dividends issued by companies are discretionary and reliant on the underling firm having the required cash reserves to do so.

Generally, ordinary shares carry a right to vote on certain issues at the annual and extraordinary general meetings of the underlying issuer. There is no guaranteed return on an investment in ordinary shares and ordinary shareholders are amongst the last stakeholders who have a right to repayment of their capital and any surplus funds of the issuer in the event that the company is liquidated.

Preference Shares

Preference shares give shareholders the right to a fixed income and the value of income derived from the share is not based on the success of the issuer company. Due to this factor, they tend to be a lower risk form of investment than ordinary shares but there is also less potential for capital growth. Preference shares tend not to give shareholders the right to vote at general meetings of the issuer, but shareholders will have a greater preference to any surplus funds of the issuer than ordinary shareholders, should the issuer go into liquidation.

Depositary Receipts

Depositary receipts are receipts, generally issued by a bank, representing ownership of shares of a foreign based company. Depositary receipts are mainly designed for U.S. and European securities markets as alternatives to purchasing underlying securities in their normal national markets and currencies. They are traded on a stock exchange in the same way that an ordinary share is.

Fixed Interest Investments

Fixed Interest investments are IOU’s issued by the underlying company. They are usually secured by a specific amount of the company/governments assets or capital. The issuer’s inability to meet principal and interest payments on the obligation is a risk that should be factored in. The asset may also be subject to price volatility due to such factors as interest rate sensitivity, the creditworthiness of the issuer, liquidity, and other economic factors, amongst other issues. When interest rates rise, the value of corporate debt securities can be expected to decline and vice versa. Fixed-rate transferable debt securities with longer maturities tend to be more sensitive to interest rate movements than those with shorter maturities.

Units in Collective Investment Schemes (UCITS)

There are a number of different types of collective investment schemes. Generally, a collective investment scheme will allow a number of investors to ‘pool’ their assets and have these managed by an independent manager. Investments available within collectives will typically include gilts, bonds and quoted equities, but may, depending on the nature of the fund, include investments in derivatives, real estate or any other asset class.

Where the collective investment scheme invests in only one asset type, there will be risks associated to that underlying asset class that may not be prevalent with other asset classes. Investors should check whether the collective holds a range of different assets which will help to diversify its risk. Subject to this, investments in collectives are likely to reduce risk by spreading the pooled funds across a number of underlying investments.

Through the diversification of investments and underlying asset classes, there is likely to be a reduction in risk. This is due to the number of underlying holdings within the collective that will reduce the effect that a change in the value of any one investment may have on the overall performance of the portfolio. Due to the nature of the investment, a collective can be subject to a number of risks that would not generally affect individual instruments. The management of the collective will often be the driver for the underlying performance of the fund itself and the fund manager’s decisions are likely to have a significant effect on the return investors receive.

Collectives can either be deemed as regulated or unregulated and you should ensure that you understand the additional risks associated with investing into unregulated collectives.

Exchange Traded Products (ETPs)

ETPs are investment vehicles (asset backed bonds) that track the performance of the underlying index, commodity or basket of assets - these are often known as Exchange Traded Funds or Commodities. For example, an ETF based on Gold will track the underlying price of a unit of gold. Rather than holding the asset itself, ETFs allow an investor a simple and cost efficient way of gaining exposure to the underlying asset. In some cases, it is not always practical to physically hold the underlying asset so ETFs are backed by assets derived from commodities. Some ETFs may involve a degree of gearing which can increase the risk and volatility of the holding. The price of the underlying asset may fluctuate and may be affected by numerous factors including supply and demand, the global markets and other political, financial or economic events. ETFs trade and settle in the same way as shares and are usually supported by a liquid market.

Penny Shares

There is an additional risk of losing money where investments are made into smaller companies, including ‘penny shares’. This means that there is a big difference between the selling and buying price of these shares and if you sell them immediately you may get back much less that the price you paid for them. The price of these shares may also be volatile and experience large swings in value and the amount of information available to investors may be significantly less than with larger, better established companies.

Derivatives

Financial derivatives are contracts between two or more parties where the value is based on an underlying financial instrument or set of assets. Common underlying instruments include bonds, commodities, currencies, interest rates, market indices and stocks.

Futures contracts, forward contracts, options, swaps, and warrants are common derivatives. A futures contract, for example, is a derivative because its value is affected by the performance of the underlying contract. Similarly, a stock option is a derivative because its value is derived from that of the underlying stock. While a derivative's value is based on an asset, ownership of a derivative doesn't mean ownership of the asset.

Due to the nature of the underlying investment, derivatives usually have a high risk connected with them. If the transaction is large in size or the underlying asset is illiquid, it may not be possible to initiate a transaction or liquidate a position at an advantageous price. In all cases, investment into a derivative should be carefully considered in terms of suitability for the investor and capacity for loss. You should ensure that you read and understand the terms and conditions of the specific derivatives and any associated obligations.

Securitised Derivatives ('Covered Warrants')

Securitised Derivatives or ‘covered warrants’ may give you a time-limited right or absolute right to acquire or sell one or more types of investment which is normally exercisable against someone other than the issuer of that investment. Or they may give you the right under a contract for difference which allows for speculation on fluctuations in the value of an index, such as the FTSE 100. These instruments have a high degree of gearing or leverage, and therefore a small movement in the price of the underlying investment may result in a disproportionately large movement, up or down, in the price of the warrant.

As a result, the price of these investments can be volatile. When dealing in warrants you need to understand that the right to subscribe is time-limited with the potential that should you fail to exercise the right within the prescribed timescale then the investment may become worthless.

You should not invest in these investments unless you are aware that you may sustain a total loss of your original investments, plus any commission or any transaction charges.

Options

There are many different types of options with different characteristics subject to the following conditions.

Buying Options

Buying options involves less risk than selling options because, if the price of the underlying asset moves against you, you can simply allow the option to lapse. The maximum loss is limited to the premium, plus any commission or other transaction charges. However, if you buy a call option on a futures contract and you later exercise the option, you will acquire the future.

Writing Options

If you write an option, the risk involved is considerably greater than buying options. You may be liable for margin to maintain your position and a loss may be sustained well in excess of any premium received. By writing an option, you accept a legal obligation to purchase or sell the underlying asset if the option is exercised against you, however far the market price has moved away from the exercise price. If you already own the underlying asset, which you have contracted to sell (when the options will be known as ‘covered call options’) the risk is reduced. If you do not own the underlying asset (‘uncovered call options’) the risk can be unlimited. Only experienced persons should contemplate writing uncovered options, and then only after securing full details of the applicable conditions and potential risk exposure.

Traditional Options

Certain London Stock Exchange member firms under special exchange rules write a particular type of option called a ‘traditional option’. These may involve greater risk than other options. Two way prices are not usually quoted and there is no exchange market on which to close out an open position or to affect an equal and opposite transaction to reverse an open position. It may be difficult to assess its value, or for the seller of such an option to manage his exposure to risk.

Certain options markets operate on a marginal basis, under which buyers do not pay the full premium on their option at the time they purchase it. In this situation you may, subsequently, be called upon to pay margin on the option, up to the level of your premium. If you fail to do so as required, your position may be closed or liquidated in the same way as a futures position.

Contracts for Differences (CFDs)

Futures and options contracts can also be referred to as contracts for differences. These can be options and futures on the FTSE100 index, or any other index, as well as currency and interest rate swaps. However, unlike other futures and options, these contracts can only be settled in cash. Investing in a contract for differences carries the same risks as investing in a future.

Transactions in contracts for differences may also have a contingent liability and you should be aware of the implications of this. These are explained in greater detail below.

Rowan Dartington uses a white label service through another provider. Should you be interested in trading in CFDs, then please contact your Investment Manager.

Swaps

The term ‘swap’ is defined broadly and includes options, swaps and other transactions based on rates, commodities, securities, debt instruments, indices, quantitative measures and other financial or economic interests, subject to certain exceptions. A major risk of off-exchange derivatives (including swaps) is known as counterparty risk, whereby a party is exposed to the inability of its counterparty to perform its obligations under the relevant Financial Instrument.

Contingent Liability Transactions

Contingent liability transactions, which are margined, require you to make a series of payments against the purchase price, instead of paying the whole price immediately. If you trade in futures, contracts for differences, or sell options, you may sustain a total loss of the margin you deposit to establish or maintain a position. If the market moves against you, you may be called upon to pay substantial additional margin, at short notice, to maintain the position. If you fail to do so within the time required, your position may be liquidated at a loss and you will be liable for any resulting deficit. Even if a transaction is not margined, it may still carry an obligation to make further payments in certain circumstances over and above any amount paid when you entered the contract. As specifically provided by the FCA, we may only carry out margined, or other contingent liability transactions with, or for you, if they are traded on, or under, the rules of a recognised, or designated, investment exchange.

Leverage

The price of certain investments is derived from the price of an underlying investment. The use of gearing in relation to such derivative investments can magnify the gains or losses in the underlying investment. Such investments are therefore more volatile and investors should consider the potential risk-reward before investing in leveraged financial instruments.

 

Generic and Market Associated Risks

Fluctuations and Past Performance

The price of investments will usually depend on fluctuations in financial markets outside of our or your control. Information on past performance, where given, is not necessarily a guide to future performance. The value of any investments and any income derived from them can fluctuate and may fall. You may get back less than the amount you originally invested or even lose the full amount.

Liquidity

A company’s survival is dependent upon both its profitability and its ability to generate sufficient cash to support its day-to-day operations. Profitability is clearly important, but even profitable companies will fail if they suffer a liquidity crisis and cannot honour their financial commitments. Liquidity risk for investors is the risk stemming from the lack of marketability of an investment that cannot be bought or sold quickly enough to prevent or minimize a loss. With liquidity risk, typically reflected in unusually wide bid-ask spreads or large price movements, the rule of thumb is that the smaller the size of the security or its issuer, the larger the liquidity risk.

Credit

Credit risk is the risk of loss caused by the failure of a counterparty or issuer. Credit risk exists in two broad forms; counterparty risk and issuer risk. Counterparty risk is that a counterparty to a transaction fails to fulfil its contractual obligations. Issuer risk is that the issuer of the stock/bond could default on its obligations to the shareholder.

General Market Risk

Market risk can be defined as: ‘The risk of loss arising from changes in the value of financial instruments.’ The price or value of an investment will depend on fluctuations in financial markets which are outside of our control such as supply and demand, investor opinion, government policy and the prices of any underlying or connected investments. The need to understand this market risk is also important in the pricing of some financial products, such as futures and options.

Diversification

The market risk of holding two securities in isolation is given by their respective standard deviation of returns. However, by combining these assets in varying proportions to create a two-stock portfolio, the portfolio’s standard deviation of return will, in almost all cases, be lower than the weighted average of the standard deviations of these two individual securities. Diversification is an important consideration for any investor and one that we will always consider within our managed portfolios.

Overseas and Emerging Markets

Overseas investments or any investment with an overseas element may be subject to certain additional risks of overseas markets. These can be different to the risks which may affect your home market. In some cases the risks will be greater. Any profit or loss gained from transactions on overseas markets or from contracts denominated in a foreign currency will be affected by fluctuations in exchange rates.

Price and market fluctuations in emerging markets can be extremely volatile. In the short-term, emerging financial markets may react with extreme volatility where news and political issues are common. Emerging markets do not tend to have the same levels of liquidity, market infrastructure, regulation and stability that tend to be found in the financial markets of more developed countries. There is also an increased likelihood of market abuse/manipulation, political influence within financial markets and less overall transparency meaning it is more difficult to price emerging markets and investments accurately.

Insolvency

Insolvency can occur where a company is unable to satisfy its debts. The default of the firm where you are a shareholder may lead to the position being liquidated or closed out without your consent. Also, your initial investment may, in part of in full, not be returned to you. Bankruptcy risk is amplified when a company has little or no working capital, or when it manages its assets inappropriately.

Foreign Exchange Risk

We may enter into transactions on your behalf in investments denominated in foreign currencies other than the Pound Sterling. This may involve entering into foreign exchange transactions on your account in connection with the purchase and sale of such investments. This involves a risk that a movement in exchange rates between currencies may cause the value of, or income from, your investments to go down as well as up and your settlement proceeds/required payment value may differ to the assumed sterling amount.

Interest Rate Risk

Interest rates will rise as well as fall depending on the government’s monetary policy. Interest rate risk is the exposure of a firm’s financial condition to adverse movements in interest rates. Interest rate risk arises through some specific products with fixed rates or, more generally, because the overall structures of the firm’s balance sheet creates an interest rate exposure.

Regulatory Risk

Investments and associated markets are generally exposed to regulatory or legal risk. Investment returns are at risk from regulatory or legal actions and changes which can, amongst other issues, alter the profit potential of an investment. Legal changes could even have the effect that a previously acceptable investment becomes illegal.

Changes to legislation regarding tax may also occur and could have a large impact on profitability. Such risk is unpredictable and can depend on numerous political, economic and other factors. Potential risks in this area are greater in emerging markets but apply everywhere. In emerging markets, there is generally less government oversight and regulation of business and industry practices, stock exchanges and over-the-counter markets.

Operational Risk

Operational risk can be summarised as human risks that can affect all companies. Issues such as malfunctioning systems and controls and essential IT systems can have a significant impact on firms, and in turn, all financial instruments. Business risks, such as the business being run incompetently or poorly, could also affect shareholder value.

Collateral

If you deposit assets with us that may have a charge in lien (used as collateral) against them, the way in which it will be treated will vary according to the type of transaction and where it is traded. There could be significant differences in the treatment of your collateral depending on whether you are trading on a recognised or designated investment exchange, with the rules of that exchange (and associated clearing house) applying, or trading off-exchange. Deposited collateral may lose its identity as your property, once dealings on your behalf are undertaken. Even if your dealings should ultimately prove profitable, you may not get back the same assets which you deposited and may have to accept payment in cash. For any holdings we hold on your behalf as collateral, the assets cease to be your assets and you will no longer have a proprietary claim over them.

Short Selling

Short-selling refers to the sale of equity instruments that you do not own at the time of the transaction. Where you have ‘sold-short’, there is a requirement on you to settle the instrument within the settlement period and you do so by buying in the underlying asset to cover the original sale. The technique is used by investors who believe the price of the underlying instrument will fall between the date of the sale and the settlement date. If the price of the share drops after the investor has sold short, then the investor will make a profit. If, however, the price of the share rises after the investor has sold short, the investor will have automatically made a loss, and the loss has the potential to get bigger and bigger if the price of the share continues to rise before the investor has gone into the market to buy or borrow the share to settle the short sale. Rowan Dartington does not currently permit short-selling.

Off-market Transactions

The majority of global regulatory bodies have classified certain exchanges as recognised or designated investment exchanges depending on local legislation. A list of UK recognised exchanges can be found on the Financial Conduct Authority’s or HMRC’s website. Transactions which are traded away from these markets (“off-exchange”) may be exposed to substantially greater risks. Unless otherwise instructed by you, we may deal for you off-exchange. Additionally, transactions off-exchange may not be subject to the same investor protection standards as transactions executed on a recognised or designated investment exchange.

Commission

Before you begin to transact on your account, you should confirm full details of all commissions and other charges for which you will be liable. Under current legislation, firms are required to provide you with a cost and charges illustration which should provide you with an analysis of the charges you will pay for the service provided. If any charges are not expressed in monetary terms then you should obtain a clear and written explanation or further confirmation from your Investment Manager.

Suspended Trading

Under certain market conditions, it may be difficult or impossible to liquidate a position you hold. This occurs, for example, if the price of an instrument significantly and rapidly rises or falls in a short period of time. This may mean that under exchange rules, trading may be suspended or restricted.

Stabilisation

We may make recommendations in securities where the price has been subject to ‘stabilisation’. Stabilisation enables the market price of a security to be artificially maintained during the period in which a new issue is sold to the public. Stabilisation may affect not only the price of the new issue, but also the price of any other securities or investments related to it.

Stabilisation is allowed by the FCA in order to help counter the fact that, when a new issue comes to the market for the first time, the price can sometimes drop before buyers are found for shares that are no longer wanted by individuals or institutions. The effect of this may be to keep the price at a higher level than it would otherwise be during the period of stabilisation.

Illiquid and Non-Readily Realisable Investments

We may recommend to you an investment we believe is suitable, although it is, or may later become illiquid or not readily realisable. This means that it may be difficult to deal in the investment and/or difficult to assess its value. We will always use reasonable care to execute such a transaction on terms that are fair and reasonable to you.