Archive for September, 2017

James & George Collie Managed Portfolios – Review of Q2 2017

Wednesday, September 20th, 2017

by Scott Middleton, Chartered Financial Planner, James & George Collie Financial Management Limited

Executive Summary

  • The James & George Collie Model Portfolios again posted a positive return during Q2, extending the gains made in the first quarter of 2017
  • Equity markets continued their upward trend in the second quarter of 2017, with an improving global economic outlook, reduced political uncertainty and positive corporate earnings revisions providing support across regions
  • For sterling-based investors European, Asian (ex Japan) and Emerging Markets equities have been the standout performers year-to-date, with UK, North American and Japanese markets also enjoying positive returns in the first half of 2017
  • In contrast, conventional gilts sold off in June, reversing the gains seen in the first quarter as Bank of England policymakers debated whether to raise interest rates.

Review of Q2 2017

5While the general election itself did not have a massive impact on bond yields, one of the most important points to note during the second quarter of 2017 was that conventional gilts posted negative returns, as the perceived change in attitude of central banks towards normalising monetary policy caused a sharp spike in yields. The ensuing speculation about austerity policies being watered down, as well as a potentially softer Brexit, also did not help gilts, leading to a total return of -1.3% from the FTSE Actuaries UK Conventional Gilts All Stocks index over the period.

As highlighted last quarter, the James & George Collie Model Portfolios remain underweight fixed interest from an asset allocation perspective, a function of our relatively cautious stance on bonds in general given the historically low level of yields on offer. This positioning once again added to relative returns, though the majority of the outperformance seen over the quarter was generated at the underlying fund selection level.

Turning to equity markets, and the FTSE All-Share posted a total return of 1.4% over the quarter, with mid- and smaller-cap companies again outperforming their larger counterparts. Year-to-date total returns for the FTSE Small Cap (ex IT) and FTSE 250 (ex IT) now stand at 8.8% and 8.4% respectively, comfortably ahead of the 4.7% return from the FTSE 100 index. The period also saw a continuation of “growth” stocks outperforming “value”, with sectors such as Oil & Gas, Basic Materials and Utilities posting negative returns over the period.

The James & George Collie Model Portfolios active UK equity holdings outperformed over the quarter, with a number of managers extending their relative gains year-to-date. The Artemis Income, Investec UK Alpha and CF Woodford Equity Income funds were three such examples, all benefiting from strong performance at the individual stock selection level as well as their underweight exposure to those poorly performing sectors mentioned above. The James & George Collie Model Portfolios allocation to the smaller end of the market also delivered firmly positive returns, with the River & Mercantile UK Equity Smaller Companies fund enjoying continued strong performance from long-standing holdings across the AIM market.

Turning to international equity markets, Europe was the standout performer during the second quarter, with the FTSE Europe ex UK index returning 4.6% against an improving political, economic and corporate backdrop. In France, the election of Emmanuel Macron was received positively by markets, with significant asset flows into the region arising from the successful navigation of this perceived political hurdle. Pleasingly, the James & George Collie Model Portfolios European equity exposure outperformed at the fund selection level, while the overweight allocation to the region also contributed to relative returns. We further increased the exposure across several of the strategies towards the end of the quarter, while also making a change to our holdings. Further details can be found in the next section.

North American equities ended down in sterling terms over the quarter, a function of the dollar weakness seen during the period. The James & George Collie Model Portfolios exposure also finished in negative territory, underperforming the broader market as the Old Mutual North American Equity and Schroder US Mid Cap holdings lagged modestly.

Elsewhere, returns from the James & George Collie Model Portfolios Asian allocations were positive, with the BGF Asian Growth Leaders – a new holding introduced in March – also benefiting from its exposure to technology names. In Japan, the Baillie Gifford Japanese Income Growth fund continued its strong start to the year with another quarter of outperformance.

Finally, the James & George Collie Model Portfolios Absolute Return exposure delivered a marginally positive return over the quarter, with the Invesco Perpetual Global Targeted Returns and – within the lower-risk strategies – Newton Real Return funds the standout performers. Returns from the James & George Collie Model Portfolios Commercial Property exposure were positive on both an absolute and relative basis, with the F&C Property Growth & Income fund enjoying a particularly strong quarter to bring its year-to-date return to 7%.

Q2 2017 Changes to Portfolios

To summarise, the key changes made to the James & George Collie Model Portfolios asset allocations over the quarter were as follows:

  • The James & George Collie Model Portfolios exposure to European equities was increased, a move that reflects our continued positive outlook for this market on the basis of an improving economic environment, diminishing levels of political risk and positive corporate fundamentals.
  • The James & George Collie Model Portfolios exposure to Japanese equities was again selectively increased, with the allocation maintained as one of our key overweight exposures at the regional level.
  • We have closed our modestly underweight allocation to UK equities across the portfolios, a move that reflects more our constructive outlook for risk assets than a wholesale change in our view on the domestic economy.
  • We have increased the exposure to Absolute Return funds within the James & George Collie Moderately Adventurous and James & George Collie Defensive portfolios, having already raised this allocation within the James & George Collie Balanced and James & George Collie Cautious portfolios earlier in the year.
  • The James & George Collie Model Portfolios cash levels were selectively reduced in the process.

At the fund selection level, we have introduced a new active fund within the James & George Collie Model Portfolios European equity allocation, while also moving the James & George Collie Model Portfolios active Emerging Markets equity holdings to an equal-weighted basis.

Starting with Europe, we have exited the James & George Collie Model Portfolios exposure to the BlackRock Continental European Income fund in favour of the Henderson European Selected Opportunities fund. This move concludes the work undertaken to increase the economic sensitivity of the James & George Collie Model Portfolios exposure to the region, and was decided upon in the wake of the first round of the French election, when our positive outlook for European equities was reaffirmed.

The addition of the Henderson fund to the strategies removes some of the more defensive biases that we had identified as a potential source of concern in a pro-cyclical market environment. John Bennett, the manager of the fund, is pragmatic in nature and his current positioning of the portfolio reflects our own broadly positive outlook for the region. Indeed, the fund’s investment process provides the flexibility to rotate into sectors that are typically under-represented within the BlackRock fund, and Bennett’s recent activity has certainly increased the “value” characteristics of the portfolio in recent times, with a move away from Healthcare in favour of an increased allocation to Banks the most notable example. The rationale for this rotation was based partially upon the valuation premium of certain sectors appearing high relative to history, but also the team’s view that selected European Banks are finally investable, both in terms of their financial strength (with their dividend yield well covered) and lowly valuations.

Paired alongside the incumbent allocation to the JOHCM Continental European fund, the result of this change is an exposure to two ‘core’ active managers that better reflect our outlook for European markets. Both remain broadly positive in their outlook and positioning, as well as relatively large cap in nature, and ensure synchronicity with our overweight allocation to this region.

The final change of note was the repositioning of the James & George Collie Model Portfolios active Emerging Markets equity holdings to an equal-weighted basis, having previously been tilted in favour of the more “value”-orientated Lazard Emerging Markets fund. The resulting position ensures a more balanced exposure to the low beta, high quality bias of the Henderson Emerging Markets Opportunities fund alongside the positive tilt towards global reflation obtained from the Lazard holding.

At the headline level, there is little quarter-on-quarter difference to our positioning across the James & George Collie Model Portfolios. Rather, it is the emphasis of these tactical allocations that we have changed. As such, we remain biased towards equities, with North America, Europe (ex UK) and Japan our key ‘overweight’ positions relative to strategic benchmarks. This is in contrast to the UK, where we maintain a ‘neutral’ allocation.

Within the James & George Collie Model Portfolios bond exposure, we retain a cautious stance overall. Although gilt yields did rise modestly during the last quarter, they still remain close to historical lows and do not appear to offer much value, especially when elevated levels of inflation are taken into account. Unfortunately, most other parts of the bond market also look expensive following a prolonged period of strong returns. We are therefore focusing on quality and liquidity, while also seeking to earn a competitive return. We remain of the opinion that yields will be slow to rise, and expect the Bank of England to keep interest rates low for the foreseeable future.

Elsewhere, we have further reduced the portfolios’ cash levels, having already lowered levels earlier in the year, ensuring that the strategies now hold only a very modest overweight position. And finally, Absolute Return holdings have been selectively increased across the strategies, though alongside Commercial Property we retain our ‘underweight’ position to Alternatives within the portfolios.


Eight years into the economic cycle and with equity markets touching new highs, exceptional year-on-year returns and no sign of a correction, it is hardly surprising that many investors are feeling cautious. However, a combination of rising nominal GDP and relatively slow monetary tightening is a benign environment for risk assets, and strong 2017 corporate earnings will provide additional support. While the tapering of central bank balance sheets requires close monitoring for signs of tighter credit conditions, equities can still make progress. A modest rise in bond yields should also be expected.

The past year has seen above average sector rotation and this has provided opportunities for active investors. Falling bond yields in recent years have helped “growth” stocks out-perform “value” and, although the former are now looking expensive, valuations are still nowhere near “tech bubble” territory. If tapering by central banks results in a steeper yield curve, “value” stocks – typically represented in most markets by financials – could come back into favour. Analysts’ forecasts of a 14% increase in global corporate earnings puts world equities on a forward price/earnings ratio of 17x. This is above the longer-term average, but by no means extreme. The US looks the most expensive and Asian/ Emerging Markets the cheapest with Europe (including the UK) somewhere in the middle. Income-seeking investors will continue to be attracted by dividend yields and these are well supported by profits at this stage in the cycle.

When it comes to making investments, there is no substitute for taking specialist advice, but remember that markets can be volatile and the value of investments can go down as well as up.

For more details on how you could invest within the James & George Collie Managed Portfolios please contact Scott Middleton on 01224 581581 or by email at to arrange an appointment.

1 April 2018- Three years of LBTT and the implications for Commercial Leases

Wednesday, September 20th, 2017

4With a limited number of exceptions, all new commercial leases in Scotland since 1 April 2015 have required an LBTT return to be submitted to Revenue Scotland shortly after the “relevant date” which varies depending on the particular circumstances. In some circumstances commercial leases in place prior to April 2015 which have since been varied will also have required an LBTT return.

The treatment of leases for LBTT purposes is significantly different to the treatment of purchases of land and buildings. The reasoning is simple, the terms of a lease can and usually will change over its lifetime. A lease may be varied, extended, assigned to another tenant or indeed may come to an end earlier than originally planned. All but the shortest leases will generally contain rent review provisions and it is common for the rent to be reviewed at regular intervals and/or on any extension of any lease. Extensions can be formally documented but can also occur by operation of law where the original lease is not terminated at the end of its documented term.

The LBTT legislation does not require a further LBTT return to be submitted to Revenue Scotland every time a change to the lease takes place. Instead, it requires that unless the lease has been terminated or assigned (at which point returns also need to be made), a further LBTT return is to be submitted by the tenant at every third anniversary of the effective date of the lease. It should also be noted that in the case of an assignation the assignee will still be required to make a LBTT return on every third anniversary of the effective date of the lease as the date of the assignation does not have any impact on the relevant filing dates. An assignation made in year two, for example, will still require a return in year three, unless it is terminated before then.

These three yearly LBTT returns inform Revenue Scotland of any changes that have occurred since the original effective date or last review date and allow the amount of tax chargeable on the lease to be reviewed taking account of those changes. Depending on the particular circumstances additional LBTT may need to be paid or some may be reclaimed. It is important to note that even if the lease has not been altered in any way a further return will still be required every three years to confirm that nothing has changed!

The 30 day timescale allowed for submission of the first of these triannual returns will start to run on 1 April 2018 for those leases which have a “relevant date” of 1 April 2015. While this may seem to be a long time away it is important for tenants to be aware of their obligations and to keep accurate records to be able to meet them when the time comes. Failing to make a return when required can result in penalties being applied by Revenue Scotland and these can be quite substantial.

If you require any further information or assistance in regard to the content of this article, please contact Steven Allan on 01224 581581 or or get in touch with your usual contact  at James & George Collie.

Overseas Broadcasts of Football Matches

Wednesday, September 20th, 2017

3There have been a large number of cases recently where companies such as the FA Premier League, BT and Sky have been pursuing publicans for damages in respect of showing “live” football matches.  This area of law has become quite complex over the last few years.  There is a great deal of confusion for members of the public and for owners of public houses.  This article will aim to shed some light on the law surrounding the broadcast of football matches without permission from the Premier League or without having a Sky or BT subscription.

It is becoming increasingly common for members of the public to walk into any pub across Aberdeen to watch a football game either at 3pm on a Saturday afternoon, or one that was scheduled to be broadcast on BT Sport or Sky Sports, and instead find themselves watching a game with either a small time delay or from an overseas broadcast.  There are a number of companies operating throughout Scotland who provide publicans with equipment to be able to show overseas transmissions of football matches which would otherwise not be broadcast in the UK or only broadcast through Sky Sports or BT Sport.  These companies are not acting in an illegal manner as there is nothing to prevent anybody from showing a football match on TV.  Any pub can transmit a broadcast of a football match to the public without the requirement of a licence however what it cannot do, is show what is referred to as “the copyright works”.  The copyright works include, but are not limited to, any logos, music, and sound effects which are played that are protected by the company.  The companies, in these cases, would be the Premier League, Sky and BT.

As a result, many of the suppliers of the overseas transmissions operate a delaying system where the logos are blurred out either on BT or Sky or, if watching a 3pm kick off, a blurring of any of the Premier League logos.  If this is performed correctly, there is no breach of any copyright, as the copyright is not being broadcast to the public.  However, many publicans are being caught because they are showing games where logos are appearing, either on BT Sport or Sky Sports, because they are showing the wrong broadcasts.  What they are doing is showing a broadcast from Sky Sports or BT Sports instead of an overseas broadcast which they should be doing.  If they are caught with the Sky Sports logo or BT Sport logo on their screen they will likely be reported by an independent investigator and could face court action from either BT or Sky.  Many of these cases do not go to court; however these companies will insist on substantial damages being paid in order for the action to be dropped.  They will also require an undertaking to be signed giving up all of the equipment and to provide the identity of the supplier of the equipment.  The FA Premier League will also do something similar.  They will open a Court action against you for broadcasting the Premier League logo if you have displayed it on your screen without it being blurred over.

How do these companies catch so many pubs?  The FA Premier League employs officers to visit thousands of pubs across the UK every year. Inspectors from the organisation FACT visit pubs and report any broadcasts of Sky or BT to the supplier.   Once you have been caught, you will have very little choice but to pay the damages they request, or face a lengthy Court battle which will cost substantially more than simply paying the damages.  Publicans run a massive risk by broadcasting Premier League games, Sky Sports games and BT Sport games without proper licences.  As much as it is legal to broadcast any football match, it is illegal to broadcast any of the copyright works.  One slip could result in thousands of pounds of damages being paid to the FA, Sky or BT.

It should also be noted that any organisation, not just Sky, BT or the FA Premier League, may make a claim against you if their copyright works are being broadcast without permission or a licence.

We at James and George Collie can offer advice on this matter.  Please contact Greg Lawson at for more information or assistance.

Improving your chances of selling your home

Wednesday, September 20th, 2017

2With more than 98% of buyers using the internet in the search for their new home, the first few seconds’ viewing can be ‘make or break’.

Check the competition and you will see some showing bright, sunny rooms with a minimum of clutter, flowers on the table and fresh towels and bedding while others could show a dingy house with unmade beds, dirty dishes in the sink, washing on the line and toys and clothes left lying around.

These days you have to take an active part in selling your home and learn to market it properly so that it appeals to the maximum number of buyers. Put yourself in the place of buyers and imagine you are seeing your house for the first time.

The key to best presenting a house for sale is to tidy, declutter, clean, neutralise the decor, fix minor repairs, decorate if appropriate and subtly accessorise – all of which will ensure your home is looking its best and you are ready to show to potential buyers.

Consider doing some of the following:

  • Store excess and outdated furniture, books and toys off site. Do not use the loft or garage where viewers will want to look;
  • Fix chips in woodwork, cracks in plaster, broken tiles or glass and dripping taps, and replace mouldy grout or sealant in the bathroom;
  • Neutralise the decor by painting over bold colours and get rid of patterned carpets. Remove family photos and ornaments and use colour sparingly on a few accent pieces;
  • Clean outside and in, including all surfaces and floors, both sides of windows and ledges and remove cobwebs clinging to walls. Do not forget to tidy the front garden as that is the first thing buyers will see; and
  • Style and accessorise by making up the beds with fresh neutral linen, dress the table for dinner, turn on lamps and add flowers and fresh towels.

Should you wish guidance on selling your home, please contact either Mary Birse in our Stonehaven office by email at or your usual contact in the Firm.

Premises Licences – Annual fees

Wednesday, September 20th, 2017

1Janet Hood, Consultant, issues a timely reminder about annual fees for your premises licence.

Every licensing board in Scotland will have sent out demands for the payment of the annual fee to maintain premises licences.

The notices will have either been:

1. sent to the premises;

2. sent to the premises licence holder; or

3. sent to the premises manager.

Every year a large number of premises licences are revoked due to non-payment of these annual fees.

This means that you cannot sell alcohol on the premises until an application for a new licence is granted or occasional licences are granted to cover the situation. In an over provision area where the licensing board believe there are too many licences, an application for a premises licence or occasional licence might not be granted and the business will be lost.

Please instruct senior staff to open the mail, please ensure your head office opens the mail and if it is a demand for payment of annual fees please ensure they are paid immediately. It can be fatal to put these demands in a drawer for payment later!

If you are:

1. a premises licence holder;

2. a premises manager; or

3. a senior member of staff

please check to ensure someone in your organisation has paid the fees.

If you have not received a demand for payment by now, please call the local licensing board which deals with your premises licence and ask them to either confirm payment has been made or to re-send the annual fee demand to you by email to ensure they are paid.

Letters get lost in the post. It is no excuse to say you did not receive the demand.

Your future is in your hands……

Should you require further advice or guidance on any liquor licensing matter, please contact Janet Hood by email at