Hamilton Financial  >  Newsletter  >  Newsletter March 2018

Hamilton Financial are an independent firm licensed by the FSA to provide advice on investments and savings.



Andrew Hamilton

Andrew Hamilton

Victoria Mann

Victoria Mann

Peter Forrester

Peter Forrester

Ana Castillo

Ana Castillo

Keith FalconerAlex Hammond-ChambersCharles HeenanRobert HunterAngus TullochMark TyndallMax Ward




Hamilton Financial is a firm of bespoke private client investment managers and independent financial advisors. We are 100% owned by the directors. We have no financial tie-ups or obligations to third parties. We are proud of our team, our Investment Advisory Board and for our record of:

  • Independence
  • Fee transparency
  • Plain English
  • Sensible financial & tax planning advice
  • Good investment performance
  • Competitively priced fees (no VAT)



As most of you will know, for some time we have been looking for one or two younger people. Success at last!We are delighted to announce that Simon Akroyd and Michael Dunglass are joining us. Simon – based in London – joins me and Victoria on the Hamilton Financial Board. Michael joins us in Dean Park Mews as Investment Manager.
Their CVs are shown below.We much look forward to introducing them to you in the coming months.




Simon Akroyd

Simon has 30 years’ experience in the financial services industry working at Cazenove & Co, Aberdeen Asset Management and New Star where he headed up the Private Client Discretionary Management department. Whilst there, he began to see the opportunities for good financial and tax planning. In 2011 he completed the Diploma in Regulated Financial Planning. He brings a strong investment background complemented by his ability to advise on pensions, IHT planning and business protection. Simon is part of the Thomson Tyndall team and sits on their Management Committee and their Asset Allocation and Risk Committee. Simon’s outside interests include a love of theatre, travelling and Burmese contemporary art.


Michael Dunglass

Michael’s investment career began in 2012 with Rothschild Wealth Management in London before moving to work with institutional and sovereign clients at BNP Paribas Asset Management. Michael read politics at Edinburgh University. He is licensed to give investment advice. His interests outside work include the countryside and all sports.




One or two friends have encouraged us to run our own pooled fund (a unit trust or investment trust).So why haven’t we taken their advice?

I will quote our own Peter Rintoul who has, in his previous life, run his own investment trust:-

“What we aim to do at Hamilton Financial is to run a fully diversified portfolio of funds managed by experts in their own particular field. So for example, for growth equity funds covering the globe, we use James Anderson and Tom Slater of Scottish Mortgage. For UK growth, we like the Independent Investment Trust run by Max Ward. And so on.
There is absolutely no way in which we would able to replicate what these experts achieve in our own fund without buying their funds. In my experience, a funds of funds – which is what our fund would become – is expensive. Finally, managing any such fund involves different disciplines and regulations that bear disproportionately on smaller funds.
We must not risk taking our eyes off the most important ball, which is providing clients with investment advice in a form that they like and can understand.”


“We must not risk taking our eyes off the most important ball, which is providing clients with investment advice in a form that they like and can understand.”




Are you sitting on a Zombie investment portfolio? A zombie portfolio is one which, through time, has grown so much that sensible changes cannot be made without triggering significant Capital Gains Tax (CGT). Let’s demonstrate this with an example:

The unrealised gains are £545,000.

The annual CGT exemption of £11,300 has little impact; so without triggering CGT, the portfolio assumes a zombie like state.

What on earth are you to do? Your portfolio manager could suggest that sales should be made, perhaps because:-

  • A particular investment is too large a percentage of your overall portfolio, and it would be unduly risky not to diversify, or
  • The risk of a significant fall in value of some of your stocks outweighs the tax triggered by a sale.

Or your portfolio manager may well suggest to you that at 20%, that’s not a bad rate of tax to pay compared with the higher rate of income tax (40% or 45% in England and Wales, 41% and 46% in Scotland, for 2018/19). Why not just live off the capital and pay 20%? Plus, the longer-term risk that the CGT rate might increase.

However, many clients are psychologically averse to living off capital, regardless of the tax position.

Alternatively, your portfolio manager may suggest that you invest in an Enterprise Investment Scheme product. Apart from an income tax rebate of 30%, this type of investment achieves CGT deferral for capital gains made in the 3 years prior to investing in EIS. The trouble about EIS investments is that they are both risky and illiquid (difficult to sell) and the CGT deferral is reversed on a sale of the EIS shares; it is not a permanent relief.

So are there any other things you might contemplate doing with your zombie portfolio? The Hamilton Financial answer is YES!

The total annual management charges (amc) paid by clients of the “big bugs” on a portfolio worth £990,000 for annual investment advice could well be 1% + VAT i.e. 1.2% – possibly lower in aggregate terms, but quite possibly higher when you factor in commission payable at say 1% on trades. In the above example, 1.2% comes to £11,880 per annum. Quite a lot I suggest for ensuring you use the annual ISA allowance (£20,000) and the annual CGT exemption of £11,300. Now I have simplified matters by ignoring ISAs and SIPPs (Self Invested Pension Plans) where managers can actively manage without worrying about CGT – but you can see what I mean. In any event, I suggest that it would be worth asking your manager for a substantial reduction in fees.

Just so you know, our fee for managing a zombie portfolio is a flat 0.6%; that’s regardless of portfolio size or complexity. (This is 0.2% to the provider of the safe custody platform plus 0.4% to Hamilton Financial.)

This zombie portfolio fee covers investment management, investment advice, general tax advice and pension advice. A potential saving using the above example of £5,940 (50%) per annum.

Should you move manager just to reduce investment management costs?

The answer is no. But, if by moving to a quality firm* you are also saving money, then of course you should consider moving. Sticking with the same example, after five years, the saving is just shy of £30,000 – by any standards, a lot of money.

*A quality firm is a firm that delivers good investment returns – measured over five years plus – allied to a high level of personal service.




If you were to ask 100 people to explain QE, my guess is that you would be lucky if one person could tell you anything more than “it’s something to do with money printing”.Given that QE has totally changed the economies of the western world, perhaps we ought to have more than a vague idea! So let me see if I can explain it in plain English.

After the Great Financial Crash of 2007/8, caused firstly by irresponsible lending in America (“sub prime” lending), Governments across the board reduced interest rates to almost zero. (In fact, believe it or not, some banks were actually charging their customers to hold their cash – negative interest rates.)

In normal times, low interest rates would be a driver of consumers to go out and spend; spending would lead to higher demand for goods and services and the economy would in time pick up. However, consumers and investors alike were so nervous that not even zero interest rates could tempt them to spend or invest. So Governments, desperate to revive confidence and avoid deflation, resorted to printing money. In easy steps, lets see what QE entails:-

  • Central banks (in the UK, the Bank of England) buys a predetermined quantity of financial assets from commercial banks. Financial assets are typically Treasury Bonds issued by Government – Gilt edged securities, GILTS for short.
  • So Central Banks now own Gilts and Banks have cash – the money supply has been axiomatically increased.

How much money has been printed by the Bank of England under QE?

A mere £435 billion between March 2009 and August 2016.

Has the money actually been printed?

No! It has been electronically created. That is, the banks have credit – or money to spend or lend – equal to the value of the Treasuries they sold.

Have other Central Banks indulged in QE?

Yes, the US Federal Reserve and the European Central Bank (Trillions!)

What has the effect of QE been?

  • The object of QE was to stimulate the economy. It has done this quite effectively. However, one of the criticisms of QE is that the banks have not lent as much to small and medium sized companies (SMEs) as was hoped.
  • There are several other outcomes of QE which could be summed up as “unintended consequences”:-

(1) Investors wanting income from bank deposits and GILTS have – as a result of pitiful yields – been forced to look elsewhere, eg. to stocks and shares. This has caused the price of these assets to increase (eg the FTSE has risen from 3,530 6th March 2009 to 7,000 at date of writing, 20th March 2018).

(2) The price of GILTS has increased, lowering their yield (income return).

(3) Pension funds, who are by law obliged to hold GILTS rather than equities, have seen their pension deficits balloon (income yields have fallen but retirees are living longer!).

(4) The gap between the haves and the have nots has noticeably widened.

What happens next?
That is the $64 million question. Brexit (June 2016) resulted in the pound reducing in value against the other major currencies by 20%. This in turn has resulted in some inflation (3% or so) which has signalled an increase in interest rates. But given that the pound has fully recovered, inflation may only be a temporary blip. (Now 2.7%).

Added to which, a serious return to high interest rates would rock the property market. So an increase in interest rates might not be as much of a “done deal” as we have been led to believe. In which case – bar the obvious threats –  Trump, Putin and Brexit – stock markets may well hold their own.




Short selling is an investment technique commonly used by hedge funds. (A hedge fund is usually an offshore fund which pools together individuals/institutional capital and invests in assets on a speculative basis.) We don’t use hedge funds for several reasons:-(1) We like to understand what our funds are doing.
(2) Hedge Funds commonly charge performance fees (up to 20%) on top of their annual management charge of 2%.
(3) Hedge funds use financial derivatives (described by Warren Buffet as “financial weapons of mass destruction”)
(4) Hedge funds can – and often do – indulge in short selling.

Investors who “short sell” use other people’s money to make a bet on the value of a stock falling. If they are right, they make money. But if stock rises, the investor loses money.

The most famous example of successful short selling was by Michael Burry who accurately forecast that the value of asset backed securities, ABSs (packaged American mortgages) – linked of course to the value of American residential property – would collapse. (The story is brilliantly told by Michael Lewis in the Big Short – Michael Burry made his investors 500%).

I am grateful to Max Ward for his example of a short sell which went spectacularly wrong. This was the US mail order company in the 1990s that was sold heavily short on the basis that it was going to be put out of business by the internet. On the day the company announced that it was moving its entire business online, the stock went up ten times. This means that the shorts lost 900% of their “investment” overnight. (This example illustrates the danger of speculating in short selling – if you are long only, the maximum you can lose is 100% of your investment).

Finally, we like Jeremy Clarkson’s comment on Hedge Funds.


“I went on holiday once to the Island of Mustique. I met a lot of Hedge  Fund managers. But I didn’t meet any Hedge Fund customers.”




Above is a graph of the value of Bitcoin over the last year. Would I buy Bitcoin? Not on your life. Why not?
Because beyond knowing it’s a crypto currency, I haven’t the foggiest idea why you would want to own it? After all, it’s like gold, it yields zero income. And if you don’t understand what you are buying, then don’t buy it. And here’s another reason for not buying Bitcoin.: the fashion for buying Bitcoin has all the hallmarks of an asset bubble. The definition of an asset bubble is to trade in an asset at a price range that strongly exceeds the asset’s intrinsic value … the price appears to be based on implausible or inconsistent views about the future.In my book, you would be as likely to do well out of Bitcoin as you would if you went to the casino. ( In his novel, The Gambler, Dostoyevsky – an inveterate gambler himself – describes the best sort of gambler. He is one who goes to the casino with his hands in his pockets; and there they stay until he leaves the casino.) My advice to anyone wanting to dabble in Bitcoin? Keep your hands in your pockets.

“Bitcoin is like gold… it yields zero income.”




“What is the minimum investment sum that Hamilton Financial will manage?” is a question we are often asked.I have always disliked the notion that it is only worth acting for the “rich”; apart from anything else, how do you define rich? One man’s definition of rich may differ hugely from another. The other thing is that investment advisors who ignore the smaller investor are almost certainly missing out. (Mighty oaks from little acorns grow).

So, do Hamilton Financial have a minimum sum? What a ridiculous idea – certainly not!




“Let me take this opportunity of saying how delighted we are with the excellent service and support we get from Hamilton Financial, not to mention the excellent investment recommendations you have made over the years”.“We just wanted to drop you a note to say thank you to you and your team for the way you have managed our retirement funds. I’m so glad I responded to the card that you sent out a few years ago when you retired from the accountancy practice and started the investment advisory business”.

“Thanks for the investment recommendations. I am happy to go with your recommendations – your recommendations have been excellent so far!!”

“Many thanks for all your great works and clever investments since joining up with you. Please proceed as you see fit, I have complete trust in your recommendations”.

“We really appreciate all the help from you and your colleagues in getting us set up for retirement and sorting out all our pension stuff”.


“I have always disliked the notion that it is only worth acting for the “rich”; apart from anything else, how do you define rich? One man’s definition of rich may differ hugely from another.”




Many years ago, my American grandmother, with my parents’ permission, sent me to an American Summer Camp, Pasquaney, on Lake Newfound in New Hampshire. The year was 1959. My Uncle had been sent there before the war, so I was a “second generation” camper and proud of it. I was the only limey there and certainly the only one with a crew-cut. The boys ranged in age from 11 to 16. They were mostly from the Eastern Seaboard States such as Maryland, Connecticut and Massachusetts. They all seemed to be very well brought up. The main thing I remember is they were God-fearing Christians, and not just in name; they really were thoughtful about others and acted accordingly.

The other day, I came across this poem in the Pasquaney Alumni magazine. It’s a poem adapted by Mother Teresa from the original by Kent Keith. It typifies the positive attitude of those American boys I met in 1959.
“People are often unreasonable, irrational and self-centered.
Forgive them anyway.

If you are kind, people may accuse you of selfish, ulterior motives.
Be kind anyway.

If you are successful, you will win some unfaithful friends and some genuine enemies.
Succeed anyway.

If you are honest and sincere people may deceive you.
Be honest and sincere anyway.

What you spend years creating, others could destroy overnight.
Create anyway.

If you find serenity and happiness, some may be jealous.
Be happy anyway.

The good you do today, will often be forgotten.
Do good anyway.

Give the best you have, and it will never be enough.
Give your best anyway.

In the final analysis, it is between you and God.
It was never between you and them anyway.”