our recommendations
Our share recommendations are viewed with regard to a medium to longer term time horizon (generally 2 to 3 years plus), whilst our recommendations for unit trusts and OEICs have a longer term time horizon, normally in excess of 5 years.
Our recommendations are classified into one of three groups:
Buy: Expected to outperform the market or other companies within its sector.
Hold: Expected to perform in line with the market or other companies within its sector.
Sell: Expected to underperform the market for reasons mentioned within the commentary or due to wider uncertainty over its recent and future prospects.
Direct investment into shares and investment trusts is regarded as moderate risk, relative to other forms of investment. Within this rating, shares on which we publish a recommendation are given one of three risk classifications:
Lower Risk: shares in this category will, in the main, be FTSE 100 companies and are regarded as lower risk relative to medium and smaller-sized companies.
Medium Risk: mostly FTSE 250 firms, with some FTSE 100 judged in terms of market size and volatility.
Higher Risk: companies within this classification will, in the main, be smaller companies, such as those which make up the FTSE SmallCap Index and which could include larger companies, the reasons which will be outlined in their respective commentaries.
We recommend for lower risk stocks a stop loss level of 12.5%, for medium risk 15% and for higher risk a stop loss of 20%. Stop losses are indicated on our FTSE 100 buy recommendations, and are taken from the point of the recommendation being made and are not a tracking stop loss. Stop losses should be set from the point of your purchase price.
Funds e.g. unit trusts and OEICs can hold a much broader spread of underlying asset classes including cash, bonds and equities. Therefore we use different classifications when assessing the risk profile of a fund:
Low Risk: funds in this category will display a low volatility and offer medium to long term returns with a degree of certainty. A low risk classification does not indicate that any given investment shall entail no risk and these funds may still reduce in value. Cash funds and "AAA" rated bond funds would generally be classified as low risk.
Medium Risk: funds in this category generally have risk profiles similar to a particular equity market as a whole. This category can be diverse and can include funds which invest in specific areas of a stock market, such as a smaller companies fund and funds which invest in the UK or overseas markets through investment trusts and collective investment schemes.
High Risk: funds in this category generally have risk profiles significantly more risky than an investment in a typical UK equity. High risk funds are likely to have substantial exposure to highly geared investments, including for example investments in derivatives or to investments in markets or sectors which typically display high volatility, for example, emerging markets.
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how we arrive at our recommendations
Shares
Our Advice Team draws on a range of news, analysis and research tools to provide the base data for their recommendations.
The primary source is the Proquote facility, available directly to each team member, and providing access to:
Regulatory News Service (RNS) information, a route by which all companies quoted on the UK markets (LSE and AIM) must release all market-sensitive information
AFX News service, covering business, financial, economic and general news
Charts, from intra-day to 9 years
Broker recommendations, providing individual and consensus views from leading analysts
Fundamentals data, accessible for individual shares and market sectors and including historic and forecast P/E ratios, earnings per share forecasts, past results, current dividends, directors' dealings, volumes of trading, Net Asset Values (NAVs)
Brokers' research, direct access to brokers' notes and research on individual companies.
By using a mix of this information, our advisers form an opinion on the current and, more importantly, future prospects of individual companies. Both the immediate and longer-term prospects are taken into account.
The view formed is a general one, based on the "average" investor with a timeframe of 2 to 3 years plus. Specific, personal advice provided to customers of The Share Centre will be given in the light of further information being provided about their personal financial circumstances and may, therefore, vary from the published view.
Changes to our published recommendations are accessible via this website.
Unit Trusts & OEICs
Our Advice Team draw on a range of news, analysis and research tools to provide the base data for their recommendations.
The primary source is Financial Express Analytics, available directly to each team member.
In addition the Advisers regularly meet with the relationship managers and directly with the Fund Managers when required from the various Fund Houses.
News is sourced from the wide variety of external publications and publications made directly available to the Advisers from the Fund Houses.
Fundamentals data includes: beta, alpha, Sharpe ratio, Treynor measure, Jensen measure, performance comparative to benchmark and sector, positive and negative periods, r2, tracking error and downside risk
The view formed is a general one, based on the "average" investor with a minimum timeframe of some 5 years or greater. Specific, personal advice provided to customers of The Share Centre will be given in the light of further information being provided about their personal financial circumstances and may, therefore vary from the published views.
Changes to our published recommendations are accessible via this website.
investment research policy
We have adopted a formal policy to govern the operation of our advice services, as follows:
Investment research is intended to be an objective assessment of a fund, a company, sector or market and is prepared and published by The Share Centre's Advice Team, which is subject to oversight by the Compliance and Legal Services Team.
All members of The Share Centre's Advice Team are salaried employees. Profit-sharing arrangements exist for each individual and are related to the general profits of the firm, or other performance-related objectives. Profit-sharing is not linked to specific transactions or to recommendations contained in investment research.
The Advice Team Manager supervises the members of the Advice Team and reports directly to the Compliance and Legal Services Director.
Members of the Advice Team are prohibited from being involved in activities which may in any way suggest they are representing the interests of The Share Centre or of a client if the activity is likely to appear to be inconsistent with providing an objective and unbiased assessment of the value or prospects of the relevant investments.
Advice Team members must not participate in marketing activity, for example, in pitches to solicit or obtain business from the issuer of a relevant investment, if this could give the perception of a later bias in their investment research. Likewise, Advice Team members must not act in a way which appears to be representing the issuer of a relevant investment, for example, in roadshows relating to issues or allocations of relevant investments.
The Share Centre may not offer or accept an inducement to provide favourable investment research coverage.
The Share Centre will not give effective editorial control to someone whose role or commercial interests might reasonably be considered to conflict with the interests of the clients to whom the investment research is to be published or distributed. Accordingly, The Share Centre does not allow anyone other than a member of the Advice Team or specific individuals whose key roles involve the approval and publication of investment research before its release. The Share Centre will only allow a limited number of people outside the Advice Team, to view its investment research before publication for the verification of information contained within it. These people are likely to be members of the Compliance Team, the Marketing Team and the independent company used to produce and edit The Shareholder and The Fundholder Magazines.
Investment research will only be published or distributed via The Share Centre's usual channels, which include The Shareholder and The Fundholder magazines, The Share Centre's web sites, www.share.com, www.sharemark.co.uk, www.thesharecentresays.com and external financial publications.
Any member of The Share Centre staff seeing sight of the The Shareholder or The Fundholder magazine ahead of its customers will not be allowed to deal or act on any investment research until such time as the intended recipients have had a reasonable opportunity to act on it.
The Share Centre will always consider whether or not its business activities could create the perception that its investment research may not be a true and fair analysis of the market in, or the value or prospects of, a relevant investment. Where it believes such an impression may be created, it will delay or restrict the publication of the investment research.
The Share Centre will always make available such additional information, such as disclosures, that it feels appropriate to accompany investment research it publishes or distributes.
Investment research will not be initially prepared for The Share Centre's internal use and then later used for publication or distribution to clients.
No member of the Advice Team or specific individuals whose key roles involve the approval and publication of investment research may buy or sell an investment which has been, or will be, the subject of published investment research or on which the individual has provided a public comment to the media originated by The Share Centre for the 10 days preceding and/or subsequent to the date of the release or comment.
In very exceptional circumstances, members of The Advice Team or specific individuals whose key roles involve the approval and publication of investment research may, with prior written approval from a Director, undertake personal transactions to which investment research relates where personal circumstances such as financial hardship require the individual to liquidate a position.
No member of The Share Centre's staff, whether or not a member of the Advice Team, may communicate the substance of any investment research, except as set out in this Policy.
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conflicts of interest
The Share Centre aims to identify and prevent conflicts of interest which may arise between itself and its customers, and between one customer and another, in order to avoid any adverse effect on its customers. The Share Centre has a Conflicts of Interest Policy which sets out procedures, practices and controls in place to achieve this and which is available upon request from the Compliance and Legal Services Team.
The avoidance of potential conflicts of interest is a key consideration so operational structures and procedures, password-controlled systems, data hierarchy, and the clear segregation of roles and responsibilities are all designed to work towards preventing any conflicts arising in the first place.
The Conflicts of Interest Policy applies to all officers (whether Executive or Non-Executive), employees and any persons directly or indirectly linked to the Share plc group of companies ("the Group") and refers to interactions with all customers of the Group.
Specific procedures are also adopted to ensure control and dissemination of investment research:
'Chinese Walls'
Flows of price-sensitive information between individual and/or internal departments are controlled by the operation of a policy of 'Chinese Walls'. Such barriers are procedural, rather than physical, and apply in a number of situations. Examples include restricting the availability of research on a new buy recommendation to just the Advice Team prior to general publication, or knowledge which is not generally available being obtained about a Corporate client by their Relationship Manager.
Where an individual is in possession of such information they may not disclose it to another party without ensuring that the disclosure is necessary and appropriate, commensurate with a 'need to know' policy. Only such level of information as is required to meet the use to which it is to be put (for example, Compliance sign-off for the research or operational planning) may be disclosed and the receiving individual is then bound by the same restrictions.
Register of information
Where a member of staff believes that they have, or may have, information about a quoted company or a company traded on Sharemark that is not in the public domain and is likely to affect the share price of the company once it becomes generally known, that member of staff must immediately register that information with The Share Centre's Compliance and Legal Services Team.
The Compliance and Legal Services Team maintains a register of such information and that member of staff will be prohibited from:
any personal account dealings within that stock;
where the member of staff works within the Advice Department, making a recommendation in relation to that stock;
divulging the information to any other individual, except with the express approval of the Compliance Officer.
Compliance will also be made 'insiders' in respect of the information received. These restrictions remain in place until either the information is in the public domain or it ceases to be price sensitive.
The Register of information is subject to regulatory inspection.
Gifts and Inducements
Members of staff must not solicit, offer or accept any gift or inducement which may influence their independence or business judgment, or which could create a conflict of interest with any duty owed to the company or its clients.
This restriction does not include special promotions on products and services which have been agreed by the directors of The Share Centre, nor does it cover corporate gifts and hospitality which are considered to be incidental to the ordinary business of the company. Examples of gifts and inducements which should not be offered or accepted include cash, gifts readily convertible into cash or any other object of significant value.
Individuals are required to register hospitality or gifts, whether given or received, with an estimated value in excess of £50 with the Compliance and Legal Services Team and to seek guidance from that department if in doubt about the suitability of any gift. Such occasions are recorded in the Register of Gifts and Inducements which is subject to regulatory inspection.
previous recommendations
During the period 1st July 2008 to 30th Sept 2008, The Share Centre's recommendations consisted of:
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Buys 51% |
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Holds 37% |
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Sells 12% |
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