Another investment manager offering enterprise investment schemes has alerted clients of a 10 per cent drop in value for one of its portfolios following new Mifid rules.
Mifid II, which came into force on 3 January, requires firms to notify clients when the overall value of their portfolio, relative to its value at the beginning of each reporting period, drops by 10 per cent and multiples of 10 per cent thereafter.
Seneca Partners, an investment manager focused on small to medium enterprises and high net worth individuals, has told advisers on Thursday that one of its EIS portfolios fell by 10.2 per cent due to a drop in the share prices of AIM-listed pharmaceutical firms Redx Pharma and Totally.
On the same day of the notification, markets in Europe hit the red zone with the FTSE 100 falling below the 7,000 mark for the first time in more than a year on renewed fears of a global trade war.
In a letter sent to advisers, seen by Money Marketing, Seneca says despite the drop in value of the Redx Pharma and Totally stocks, “we remain optimistic about your portfolio’s performance and look forward to updating you on the progress of your investments in our next monthly update due in April 2018.”
Advisers have been notified of the drop by email on the same day clients were. However, clients were told about issues with Redx Pharma shares in the latest update from the firm.
The EIS Portfolio Service at Seneca is a discretionary portfolio that allows a bespoke selection of four to six AIM listed companies. This means the reasons for a notification of a drop in value and the amount of each fall in value will likely differ from one portfolio to another.
Investors must hold the shares in their EIS portfolio for at least three years to get qualified for tax relief.
Money Marketing recently reported EIS manager Downing was allegedly the first firm to send the 10 per cent portfolio drop alert to clients following a 21 per cent fall of one of its products.