The Discretionary Investment Management Service is designed for clients who require bespoke investment management and who wish to delegate the day-to-day management of their portfolio to Odin Investment Management Limited (“Odin”). 

The service that Odin will provide in respect of this account will be based on the information you supply in this Agreement relating to your financial position, risk profile, time horizon and investment objectives, together with any other relevant information as notified to us in writing from time to time.

We shall have full authority to manage the composition of your account and to enter into any kind of transaction or arrangement on your behalf in respect of investments, subject always to this Agreement, at our discretion and without prior reference to you. 

You agree to your portfolio being managed in this way.

We do not provide investment ‘advisory services’ and, as such, whilst we have regard to your investment objectives, risk profile and other relevant information as notified to us in writing from time to time, the nature of the service means that we do not seek your approval before making or disposing of particular investments on your behalf. If you are in any doubt as to whether or not a ‘discretionary portfolio management service’ meets your particular requirements, please make us aware of this, so that we can discuss the position with you further.

Risk

Your attitude to risk

We are required to ensure that our actions suit your specific attitude to risk. Having read the following, please ensure that you fully understand the different levels of risk detailed below. 

Risk

Seeking an investment return higher than that available from cash involves taking risk, (‘higher risk can equate to higher potential reward’). Whilst taking on more risk increases the possibility of a higher reward, increased risk also increases the possibility that you might lose a greater amount of money, and you should never take-on more risk than you are comfortable with.

Affordability (capacity for loss)

In order to assist you with your decision taking and selection of preferred investment strategy a ‘capacity for investment loss’ illustration is set out below:

0 to -10% loss of portfolio value: Very low ability to bear investment risk

-10% to -20% loss of portfolio value: Low ability to bear investment risk

-20% to -30% loss of portfolio value: Moderate ability to bear investment risk

-30% to -40% loss of portfolio value: High ability to bear investment risk

It is important when selecting the level of risk that you are willing to accept that you consider your ‘capacity’ for loss. By this we mean that if your portfolio declined in value, what fall would have a detrimental effect on your standard of living?

Your portfolio may represent ‘spare funds’ from which you do not require income or capital gains to maintain your lifestyle, in which case you may feel it appropriate to accept a higher level of risk. Conversely, if your portfolio represents a high proportion of your assets, and you require a regular income stream from the assets, then the level of risk you are prepared to take may be low, and the asset classes appropriate to meet your requirements may be limited. Information on historical returns are detailed later in this Agreement which may help you decide on the level of risk that you are prepared to accept.

Risk profile 

Your risk profile can be described as ‘the investment risk that you are prepared to accept’, and will determine the type of assets that will be included in your portfolio. 

Our four Investment Strategies offer differing levels of risk and will typically be made up of a variety of different asset classes as detailed below, (in ascending order of historic risk):

Asset classes

Cash – the least volatile investment giving guaranteed value, and a return linked to the prevailing rate of interest. The return may be zero.

Bonds – generally pay a set rate of interest over a given period, then return the investors’ principal. Historically, they have been less volatile than equities. The value of bonds fluctuates mainly due to current, (and anticipated), interest and inflation rates. Bond investments may include Government Securities and Eurobonds.

Equities – equities have historically out-performed other investments over long periods but can be more volatile in the short-term.

Alternatives – often requiring long-term commitment either due to low liquidity, need to obtain tax advantages, or high volatility. These investments may include convertibles, hedge funds, venture capital, property and private equity investments. Returns can be high.

Derivatives – no direct purchases will be made in derivatives, (including options and contracts for difference), except under a supplementary agreement (please see section 2 of our Terms and Conditions – ‘The Investments we will deal in’).

The amount invested in each asset class will change depending on the level of risk that you are prepared to accept. For instance, the higher the risk rating of a portfolio, the greater percentage of high-risk investments that will be included. Higher weightings are likely to be held in some of the following, (this list is not exhaustive):

• A high exposure to equities;
• More exposure to assets with historically higher volatility (e.g. technology, biotechnology);
• More investments that are exposed to emerging markets; and
• The possibility of investments that may not be able to be sold immediately.

Historically, the more invested in a higher risk asset, the more the potential return, but this is also combined with a higher level of volatility, (by which we mean larger rises and falls over a set period).

Odin will discuss with you your personal circumstances, (investment objectives, timescale, financial position, age etc.), to enable you to decide which level of risk is most appropriate for you.

You may amend or change your investment objectives or risk profile or add to or change any restrictions you have previously imposed. However, any such amendment will only become effective when we receive confirmation in writing from you, in accordance with the signing arrangements in this Agreement.

No amendment will affect any outstanding order or transaction or any legal rights or obligations which may already have arisen.

Diversification

Diversification can be defined as an asset manager purchasing different types of asset to reduce the risk of investing, (purchasing a ‘spread’ of investments), thus reducing exposure to any particular asset class. 

The asset classes mentioned above have different characteristics and react differently to changing economic conditions. Portfolios are most commonly diversified by:

• holding different asset classes – a portfolio that owns different types of assets is less likely to be affected by price declines applicable to any particular asset class.

• geography – investing in businesses or assets in different parts of the world may reduce exposure to currency risk and to regional economic differences.

• industry – some businesses react differently to economic changes – for instance rising interest rates are generally considered a negative for high yielding utility companies.

Time horizon 

Your investment time horizon is the period of time over which you intend to own your portfolio and should reflect your circumstances and be consistent with your investment objectives and risk profile.

In general, holding your investments over a longer period of time reduces the overall volatility of your portfolio as investments that have declined in value may recover some or all their loss. 

Having said this, it should be noted that even if investing over a long time period, there is no guarantee that you will always achieve your investment objectives.

In deciding over what period to invest, you must give consideration to your personal financial circumstances.

Odin’s Investment Committee is responsible for establishing the firm’s overall asset allocation strategy within the restrictions imposed by each of the four Investment Strategies detailed later in this Agreement.

Investment Strategies

We are required to ensure that our actions suit your specific circumstances. Please ensure that you fully understand the different levels of risk detailed below.

Income (Lowest Risk) 

This service is designed for the conservative investor where the prime aim is at all times the preservation of capital with minimal risk. There will be low exposure to equity markets. Being defensive in nature may limit any real increases in capital value. Portfolios will generally only invest in Government and corporate bonds within ‘trustee status’, and cash. 

Balanced growth (Low/Medium Risk)

This service offers investors’ portfolios that will have a significant exposure to fixed interest securities and cash, with some exposure to direct equity investment. Collective investments may also be included for portfolio diversification to include commodity and natural resource funds. Exchange Traded Funds may also be used where appropriate. The investment managers will at all times seek to maintain both a steady level of growth, and reduced volatility in the value of the portfolio.

Capital Growth Higher Risk/Return (Medium Risk)

This service provides investors with portfolios that have the potential to be largely invested in the equity markets, together with collective investments exposure for added diversification which may include commodity and natural resource funds. Exchange Traded Funds may also be used where appropriate. Both fixed interest securities and cash may be held at times of higher equity risk. As such, a degree of volatility in the value of the portfolio is to be expected. The service aims to achieve long-term growth.

Total Return (Higher Risk)

The ‘total return’ service is aimed at investors who are seeking superior long-term capital appreciation from their investments, and are prepared to accept a high degree of volatility in the value of their portfolio. Portfolios may have very low levels of both cash and fixed interest exposure, and will typically, at any given time, have a greater exposure to equities, exchange traded funds and other collective funds than the ‘Capital Growth’ service.

Investors can choose more than one Investment Strategy, i.e. a client might select the ‘capital growth’ for the vast majority of their investments, and the ‘total return’ Investment Strategy for a much smaller proportion. In addition, it is permissible for a client to move from one Investment Strategy to another over time, (for instance on retirement a client may require a higher level of income than produced from our ‘capital growth’ Investment Strategy, in which case a switch to the ‘income’ Investment Strategy may be appropriate).

In addition, Odin is able to tailor each of its four Investment Strategies to provide bespoke portfolios to more closely meet clients’ specific requirements – for instance a client might require a set level of income from a portfolio, or alternatively a particularly low level of volatility, in which case Odin will talk through the various options, and explain the relative risks of pursuing one policy over another, enabling you, the client, to decide which policy is most appropriate.

Before you make your choice you will discuss the Investment Strategies with a Director of Odin and then we will ask you to select the Investment Strategy that most closely meets your investment needs.

The Investment Strategies page details more fully our four Investment Strategies and includes information on the level of risk, portfolio limits of asset classes, typical weightings of our portfolios between asset classes, the suggested minimum investment period, historical performance over one and four years, and finally the maximum annual gain or loss in any one year over the past four years.