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Adventurous Portfolio Update - Summer 2018

20 July 2018

Second quarter performance analysis for the St. James's Place Adventurous Portfolio.

The Adventurous Portfolio posted a strong return across the quarter, boosted by its exposure to international equities and positive stock selection.

While the quarter saw gains in only select parts of the bond market, it was broadly good for equities, albeit with some important regional exceptions. Across the developed world, equities continued to enjoy the benefits of correlated global growth, while performance across emerging markets was more erratic. The Portfolio’s relatively high equity exposure was a major strength over the three-month period.

In the UK, growth disappointed, despite an upward revision to first quarter data. Persistent confusion over Brexit (and warnings from business leaders) contributed to uncertainty, while inflation slipped a little. Yet the dip in inflation actually acted as a support for UK stocks, since it reduced the likelihood of the Bank of England announcing interest rate rises. The shift in the rates outlook helped to attract some international investors back to what had been a relatively unloved market, giving the FTSE 100 its strongest quarter since 2011. The UK General & Progressive fund, co-managed by Majedie and Blackrock, benefited from these tailwinds, but also outperformed the wider UK equity market thanks to good stock selection. Majedie’s holding in Sainsbury’s, the UK’s second-largest supermarket chain by market share, enjoyed a boost on markets when it announced plans for a merger with Asda, the third-largest. If the merger receives regulatory approval, Sainsbury’s hopes it will enable it to compete more effectively with low-cost discounters Aldi and Lidl, but through increased buying power rather than job cuts or store closures.

Despite significant worries in Asian markets, and the beginning of a bear market in China, both the Asia Pacific and Emerging Markets Equity funds posted positive returns over the quarter, far outperforming the broader market. The Asia Pacific fund, managed by First State Stewart Asia, benefited from its holding in LG Household & Healthcare, a South Korean consumer goods company. LG boosted its presence in overseas markets during the quarter, buying Avon Products, a Japanese cosmetics company.

The Global Smaller Companies fund, managed by Paradice Investment Management, also contributed to Portfolio returns. Among its best-performing holdings was Halyard Health, a US medical manufacturer, which beat its highest earnings forecast and enjoyed a rapid stock surge following an upgrade from KeyBank.

You may also be interested in the full Adventurous Portfolio Update.

 

The price of funds and the income from them may go down as well as up.  You may get back less than the amount invested.

Portfolio fund allocations are not rebalanced automatically. Thus Client Portfolios may not include all of the stocks mentioned in the commentary, as fund allocations may vary between clients, leading to different investment experiences.

The value of an investment with St. James's Place will be directly linked to the performance of the funds selected and the value may fall as well as rise. You may get back less than the amount invested.

FTSE International Limited (“FTSE”) © FTSE 2018. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under licence. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Some of the products and investment structures documented within this article will not be available to our clients in Asia. For information on the funds that are available please get in touch.

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