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Conditions

Whenever you access www.principalinvestment.co.uk, you accept that these Conditions apply to your use of www.principalinvestment.co.uk and to all matters arising from your use of www.principalinvestment.co.uk. Principal Investment Management Limited (we or us) may change these Conditions at any time and without prior notice. You agree to be bound by the Conditions pertaining at the time you access the site.

Entry Restrictions

The information on www.principalinvestment.co.uk is intended solely for the use of people who are UK residents for tax and investment purposes. It is not for distribution in any other jurisdiction.

General Provisions

The views expressed on this website are based on information which we believe to be reliable, but are not guaranteed as to accuracy or completeness by Principal. This website is not, and should not be construed as, an offer, or the solicitation of any offer, or general or definitive advice, to buy or sell any investment and any expressions of opinion are subject to change without notice.

Any recommendations for particular investments are necessarily made without taking into account readers’ specific financial circumstances and requirements and do not constitute investment advice under the Financial Services and Markets Act. Accordingly, readers may wish to seek proper professional advice before acting on any information contained in this website.

Use of the information on this website by any party for any purpose whatsoever shall be entirely at such party’s risk. We accept no liability whatsoever for such use and no claims for loss or damage arising from reliance on the information by any party shall be entertained. We will not be liable to you for any disruption in the service because of something we cannot reasonably control (eg a systems failure).

A failure or delay by either party to enforce any right under these Conditions is not an implied waiver of that right or of any other right in the future. If any provision in these Conditions is held or made invalid by a court statute or rule or otherwise, the remainder of these Conditions will not be affected. These Conditions are subject to English Law and other applicable Laws and rules. In the event of a conflict between these Conditions and any other such laws and rules the latter will prevail. Nothing in these Conditions is intended to affect your rights under the Financial Services and Markets Act.

On-line Valuation Service

As well as general information about Principal and our investment services, www.principalinvestment.co.uk includes an on-line valuation service to allow clients and their professional advisers to check the current value of their investments with Principal. This service does not replace the hard copy periodic report which is sent to clients at regular intervals.

In addition, professional advisers who use 1st Software's "Adviser Office" administration system are able to access the valuation data in Principal's on-line valuation service directly from Adviser Office.

Valuations for the on-line valuation service are as at the close of business on the previous business day (or once a month, in the case of certain corporate bonds) and are calculated on the following basis:

• UK quoted securities are valued at the mid-market price or last traded price on the relevant stock exchange as obtained from FT Interactive Data;
• Unit trusts are valued at the bid price and OEICs at the quoted market price;
• Unquoted securities are valued at prices obtained from accredited sources. Sources supplied on request;
• Overseas quoted securities are valued at the mid market price or last traded price in the local currency on the relevant stock exchange as obtained from accredited sources. Sources supplied on request. Exchange rates are closing mid-point spot rates as quoted in the Financial Times.

On-line valuations will not include a measure of performance.

The on-line valuation service is based on sources of information believed to be reliable in all material respects at the date of publication and is published in good faith. However, no guarantee is given as to the accuracy or completeness of the content. In particular, no guarantee can be given in respect of the prices which are used to up-date the valuations on a daily basis, as these are provided by external sources. In respect of certain third party accounts (eg Lloyds and certain pension providers), we are reliant on the third party to pass us their valuations so that we can mirror the transactions.  In some cases, these may only be provided to us on a quarterly basis.

Risk Factors

Investing in equities involves risk. The value of investments, and the income from them, can go down as well as up. Investments may be subject to an initial charge. You may not get back all that you originally invested, particularly in the case of early withdrawal. Past performance should not be seen as an indication of future performance.

For portfolios invested in overseas securities, the value of investments may also rise and fall purely as a result of exchange rate changes. Any tax reliefs referred to are those currently available. Their value depends on the individual circumstances of the investor. Levels, bases of and reliefs from taxation may change. Capital on deposit with a building society is generally regarded as secure and is immediately accessible.

Conflicts of Interest Policy

Under the EU Markets in Financial Instruments Directive (MiFID), Principal is required to publish details of how we manage conflicts of interest to ensure that our interests are never put ahead of those of our Clients, and that one group of Clients is not treated more favourably than others.

Principal has set up systems to identify on an ongoing basis any conflicts of interest that may arise. This document sets out those potential conflicts and summarises the rigorous controls and procedures we have in place to ensure that the impartiality of our investment decisions is never compromised.

One of the objectives of Principal’s business plan is the maintenance of a strong compliance culture as a key competitive advantage. This is not something that can be measured, but its importance cannot be underestimated in the efficient operation of systems and controls to manage issues such as conflicts of interest. This culture is constantly reinforced with all our staff, for example, through a comprehensive induction and ongoing training programme that emphasises the need always to act in Clients’ best interests, and regular assessment by the Compliance team of any rule breaches and errors, focusing on treating customers fairly.

The company's main business activity is discretionary portfolio management. We do not deal on our own account, ie we do not take positions in stocks for the company’s (our own) benefit. (However, we may need to buy or sell stock in certain circumstances eg to correct an error we have made, such as purchasing too much stock on a Client’s behalf. Such transactions are limited in number and are driven solely by the need to ensure the orderly management of Client portfolios.)

In view of the above, there are only a limited number of areas where the potential exists for the independence of our investment research or decisions to be compromised. These are as follows:

• The possibility exists for an in-house Analyst or Investment Manager to be influenced in his research findings or investment decisions by gifts or inducements from unit trust groups, Independent Financial Advisers (IFAs), brokers or Clients.

This is mitigated by our Gifts and Inducements Policy, which prohibits our staff and directors from accepting any gift or inducement which could lead to a conflict of interest vis-à-vis our duties to our Clients or be damaging to our Clients’ interests.

Accordingly, employees are not allowed to accept a gift or inducement (including entertainment, and subject to a de minimis limit) unless they can demonstrate that there is a genuine business case for it. All such applications must be authorised by the Group Managing Director or Group Finance Director and Compliance Officer, and entered in the Gifts Register maintained by the Compliance team.

• Principal generally receives renewal commission on the unit trusts and OEICS we purchase on behalf of our Clients; however, this is not always the case. We have a clear policy that our Analysts and Investment Managers should disregard the availability of renewal commission in making their investment recommendations or decisions. Much of our research is based on quantitative data (although there is also a subjective element) and this, together with our policy of linking part of the remuneration of relevant employees directly to the performance of the investments they select, provides control over this potential conflict.

• In order to ensure that deals cannot be allocated in favour of one group of Clients or staff, we operate Dealing and Allocation procedures which cover dealing fairly and in due turn, and how allocations should be made if insufficient stock is available. Similarly, we have strict Personal Account Dealing rules in place to ensure that staff cannot deal on their own account ahead of those of our Clients, or in a manner contrary to our Clients’ interests.

• We operate our own fund of hedge funds, the Absolute Alpha Portfolio (AAP), and also manage funds on behalf of other companies within the Sanlam Group (Sanlam Funds).  In order to ensure that our discretionary Clients are not inappropriately invested in the AAP, the suitability of this investment for each Client is strictly assessed.  The same assessment is also undertaken for each of our discretionary Clients, as regards investment in the Sanlam Funds, unless the Client’s IFA recommends or takes the decision to invest.  Investments in the AAP are excluded from Clients’ portfolios for the purpose of calculating annual management fees, to avoid the possibility of double charging.  We will negotiate the fees payable by our Clients for investment in Sanlam Funds on an “arms length” basis and on the same commercial terms as for other funds invested.  We may also receive renewal commission for certain Sanlam Funds but the level of commission will be in line with that received from other unit trust and OEIC Managers. 

In summary, our procedures are designed to ensure that we abide at all times with the overriding principles of “best execution” and “suitability” when making investment recommendations or effecting transactions on our Clients’ behalf. This ensures that our Clients are never disadvantaged and are always treated fairly.

The effectiveness of all these controls is monitored on an ongoing basis.

Order Execution Policy

1.   Purpose
Under the EU Markets in Financial Instruments Directive (MiFID), Principal Investment Management Limited (“Principal”) is required to put in place an order execution policy and to take all reasonable steps to obtain best execution when dealing on behalf of its clients. The purpose of this document is to provide clients with information on Principal's order execution policy.

2.   Best execution
Subject to any specific instructions that you may give us (see section 4 below), we will take all reasonable steps to obtain the best possible result for our clients either when executing orders, or when transmitting orders to other entities for execution, on their behalf. These orders will generally arise as a result of decisions made by us, in our capacity as a discretionary portfolio manager, to deal in financial instruments on behalf of our clients. Exceptionally, orders may be given to us by clients wishing to transact on an execution only basis.

In order to achieve the best possible result, we will take into account the following factors (referred to subsequently as the “execution factors”):

· The price at which the order could be executed
· The costs that will be payable directly by the client as a result of execution of the order
· The speed of the execution and settlement of the client order
· The likelihood that the client order will be executed and settled
· The size of the deal
· The nature of the deal
· Any other consideration relevant to the execution of the order

Price achieved will be our primary focus for the majority of transactions. As clients pay a pre-agreed rate of commission for deals Principal carries out on their behalf and Principal absorbs the costs directly associated with execution for most types of order, cost is generally not relevant in deciding how we execute orders.

In some circumstances, we may determine, using our commercial judgement and experience, that other “execution factors” are more important than price in achieving the best result. In determining the relative importance of the “execution factors” for each individual order, we will take into account the characteristics of the client and the client order, the characteristics of the financial instrument involved and the characteristics of the brokers and execution venues to which the order can be directed.

3.   Selecting brokers and execution venues
We will generally pass client orders on to third party brokers for execution. We select brokers with execution arrangements that will enable us to obtain on a consistent basis the best possible result for our own clients. Some types of order, principally those in unit trusts and open ended investment companies (OEICS), are executed directly with an execution venue (ie the manager of the relevant collective investment scheme in the case of unit trusts and OEICS). Where we are unable to find an execution venue or broker willing to accept an order, for example in certain fixed interest stocks where the size of an order is below the minimum tradeable size, we may execute the order ourselves, in which case Principal will be the execution venue. Where this occurs, we will take care to ensure that the price at which the order is executed is the same price at which the order could have been executed by a third party had the order been of the minimum tradeable size.

The table in the Appendix details a list of the brokers and execution venues through which we currently place significant business. The list is not exhaustive, and we may execute on alternative venues or pass orders to other brokers so long as such venues and brokers are appropriate and consistent with our order execution policy.

The list may change over time to reflect the results of our monitoring and review process detailed in section 5 below. An up-to-date list of our main brokers and execution venues is always available on the Conditions section of this website, or from our Group Compliance Officer on request. You will not be notified separately of any changes to brokers or venues, although you may request a list at any time.

[Note: Execution venue is a term used to describe a market or counterparty that is used to transact orders. There are several types or classifications of execution venue. For example, The London Stock Exchange is an execution venue and is classified as a regulated market.]

4.   Specific client instructions
Where you give us a specific instruction as to the execution of an order, we will execute the order in accordance with those specific instructions to the extent that it is possible to do so. You should be aware that providing specific instructions to us in relation to the execution of a particular order may prevent us from taking the steps set out in our order execution policy.

5.   Monitoring and review
We will monitor our compliance with, and the effectiveness of, our order execution policy on a regular basis. We will regularly assess the brokers and execution venues that we use to ensure that they continue to enable us, on a consistent basis, to obtain the best possible result when executing orders and to determine whether we need to make any changes. We will undertake a review of our order execution policy at least annually or whenever a material change occurs that may affect our ability to obtain the best possible result for you on a consistent basis. We will notify you of any material changes to our order execution policy when we write to you with future valuation reports and you may request an up-to-date policy at any time.

If you have any doubt about whether our portfolio management service is suitable for you, or if you would like further information, please consult your financial adviser or contact us for advice.

Authorised and regulated by the Financial Services Authority
Registered in England and Wales No.2041819
Registered and Head Office: 16 South Park, Sevenoaks, Kent, TN13 1AN