What am I getting for the SCM Direct annual management fee of 0.4% + vat?

Professional fund management led by our highly respected Chief Investment Officer (CIO), Alan Miller who has over 29 years investment experience and possesses a long track record of outperformance.

There are different types of ETF; which types does SCM Direct invest in?

Whichever is best for the particular market. There are two main types of ETF – physically backed and synthetic ETFs.

 
Physical ETFs invest in the actual underlying securities to replicate the underlying index (sometimes this process is ‘optimised’ whereby not every single index constituent is held to reduce overall costs).

 
Synthetic ETFs use an investment product known as a swap to replicate the underlying index and may directly hold a different portfolio of securities to the index being tracked.

 

SCM Direct invests in both types of ETFs, assessing each structure and underlying index as part of a thorough due diligence process. SCM Direct only invests in a synthetic ETF when its third party ‘counterparty risk’ is 100% collaterised through the fund holding a basket of liquid securities to mitigate this ‘counterparty risk’.

Can I use an adviser to access SCM’s portfolios rather than use the direct SCM services?

This is completely your choice. There are normally extra costs associated with using advisers but you might feel that the extra financial advice, which they may offer you, makes their fees worthwhile.
The 3 SCM core portfolios are available via independent financial advisers if the adviser uses one of the following platforms; Ascentric, Novia, and Transact. You just need to ask them to contact us at SCM Direct at enquiries@scmdirect.com or call 020 7838 8650 and ask for a member of the investment team.

SCM Direct says it operates a Profit for Purpose Model — What Does That Mean?

A percentage of profits generated by SCM Direct will go to the True and Fair Foundation which supports small dynamic charities doing transformational work in the community; primarily in
the UK.

Is SCM Direct regulated by any organisation?

SCM Direct is a trading name of SCM Private LLP, which is authorised and regulated by the UK’s Financial Conduct Authority (FCA) to carry out investment business.

Is everything managed via an online platform?

Yes. Clients can view their portfolios and have full transparency of holdings online.

If SCM is so sensible and straightforward, why doesn’t everyone do it?

The way SCM operates is extremely efficient and cost effective. This model doesn’t allow for high fees, bonuses, or commissions to be charged.

 
In addition some fund management organisations run a scatter gun approach. By running many different funds, there will always be one or more that are doing well and then can be aggressively sold to investors. Meanwhile those that do badly will often retain their clients as there tends to be great inertia in finance. Heads the fund manager wins. Tails the client loses.

I want to compare SCM Direct portfolio performance using other online tools — is this possible?

The SCM Direct investments are segregated portfolios, not listed funds, and performance is not available via third-party websites.

 
Monthly performance is published through the portfolio factsheets, and clients are able to monitor their portfolio via the secure online account.

 
Please remember that the performance we show is after ALL costs and charges. You can therefore not compare this with many platforms that will show the performance of a fund BEFORE their charges.

How safe are ETFs and what are the risks?

SCM Direct only invests in ETFs. We do NOT invest in any ETNs (Exchange Traded Notes) as we believe the risks associated with such products as being much too high. SCM Direct only invests in UCITS IV ETFs for its GBP based portfolios to provide additional investor protection.

 
The price of the ETF depends on the value of the underlying investments and the demand for the ETF shares in the market, and the share price may therefore be at a discount or premium to the fund’s asset value. Some ETFs are more thinly traded than others, which may affect their liquidity, especially in a market downturn. Although ETFs normally have a low tracking error, i.e. a measure of how consistently it follows its benchmark, during times of market volatility the tracking error of an ETF may increase.

 
The value of the investment may rise or fall in value and neither the capital nor income is guaranteed.

 
Typically, ETFs try to replicate a stock market index such as the FTSE 100 or the Hang Seng Index, a market sector such as energy or technology, or a commodity such as gold or petroleum. Accordingly, if such index, sector or commodity price fluctuates, so will the value of the ETF.

 
There may also be a counterparty risk as some ETFs generate additional revenue by lending out some of their investments. Similarly, some ETFs seek to achieve their objectives through the use of derivatives, which carry counterparty risk. In either case if the counterparty defaults, the investor may see a reduced return regardless of the performance of the underlying assets. To mitigate the counterparty risk providers or lenders post collateral by setting aside a pool of assets that the investor can claim on in the event of the issuer or lender’s default. SCM Direct only invests in those ETFs that hold a minimum of 100% collateral posted daily.

 
Leveraged and Short ETFs can often be more complex financial instruments that may significantly amplify volatility and therefore risk. For this reason, SCM Direct does not invest in any leveraged or short ETFs.

 
If the ETF’s underlying investments are in a currency different to the ETF’s denominated currency (i.e. portfolio exposure to Sterling but ETF denominated in Euros), there will be an additional currency risk to consider when making the investment as exchange rates may cause the value of overseas investments and the income arising from them to rise or fall.

How often does each portfolio change its asset allocation?

This is not set in stone. We only trade where we see a significant benefit in terms of the likely extra returns less the associated costs. This can mean that in some months we do not make any changes, which can be very counter-intuitive.

 
Typically, we have changed between 30 and 50% of the portfolio’s holdings each year; with some of these changes resulting from changing an existing ETF from one provider to another with a newer, cheaper, more diversified alternative.

How much have the founders of SCM Direct personally invested in the portfolios?

The founders originally invested seven figure sums (i.e. £1m or more) in each of the 3 core GBP portfolios and have added further significant amounts since the portfolios started.

How do the USD $ and EUR € portfolios differ from the GBP £ portfolios?

The asset allocation of each portfolio will have a natural bias to the home currency and markets of the currency selected – i.e. the GBP £ portfolio with normally have a bias to GBP £ denominated markets e.g. UK equities and bonds. These will all be London Stock Exchange (LSE) listed ETFs.

 
The USD $ portfolio will normally have a bias to USD $ denominated markets e.g. US equities and bonds. These will all be NYSE (New York Stock Exchange) listed ETFs.

 
The EUR € portfolio will normally have a bias to € denominated markets e.g. European equities and bonds. These will all be ETFs listed on a European Stock Exchange.

How do I transfer my ISA or SIPP to SCM Direct?

SCM Direct takes cash transfers into each tax wrapper. There is an online application process to create the SCM Direct wrapper and account information will be sent to your current provider for transfer to your required portfolio. Once funds have been transferred, they will be invested at the next allocation (normally, the first business day of every week).

Can I add to my investments using a debit or credit card?

Not at present.

How do I see the details of any transactions that have taken place against my account?

These can be located via your existing log in under the ‘Transactions’ (stock) and ‘Cash Statement’ pages.

How do I monitor my investments and your success or otherwise?

Just login to your online account to view your portfolios performance and valuation using the previous business days closing prices.  We also provide a pie chart of investment allocation by sector and performance graphs over different dates for each product you have with SCM direct.

How do I contact you and can I ask you questions before investing?

SCM Direct can be contacted at enquiries@scmdirect.com

How do I close my account and are there any penalties if I choose to do so?

No. Simply email us your instructions. We will undertake a number of checks to ensure your identity before acting on any instruction.

We believe it is your money, and as such you should not be penalised for changing your mind or if your circumstances change. Of course, the normal market-maker spreads, rate and other dealing related charges will apply.

As long as we receive your instruction by the close of business on the Thursday of any week, we will endeavour to close the account, on the first business day of the following week.

The monies will then ONLY be transferred to the account from which you funded your account.

The whole process from you sending the instruction, to receiving the cash back into your account, will normally take less than two weeks.

How do I change my postal address?

Requests should be sent to us via email to this address – enquiries@scmdirect.com

How do I change my bank account details?

Requests should be sent to us via email to this address – enquiries@scmdirect.com

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