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Managed Funds Portfolio Update - Summer 2018

20 July 2018

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

The Managed Funds Portfolio posted strong returns over the quarter, benefiting from both broader equity exposure and positive stock selection.

Trade fears rose over the period, as the US president followed through on campaign threats to impose trade tariffs. Thus tariffs were imposed on goods from China, Mexico and Canada, with more threatened that would target both China and the EU. While this unsettled investors, and markets could dip in the short term on tariffs news, dips were often limited to particular regions (notably China) or particular sectors or stocks. Moreover, any softening of initial threats tended to act as a fillip to markets. All the same, the rising importance of politics on markets did add to unpredictability. The Multi Asset fund, co- managed by Invesco Perpetual, Schroders and Payden & Rygel, was among those to suffer over the period. “Two years ago, central bankers were the most powerful people in the world - now the politicians are back in charge,” said David Millar of Invesco Perpetual.

Yet most funds in the Portfolio posted strong returns, chief among them the International Equity fund, which significantly outperformed the broader market. The fund, managed by Magellan in Sydney, benefited from positive stock selection, not least Visa and Mastercard. Low unemployment, higher wages and improved retail spending were among the broader US economic trends that helped the electronic payment companies. Mastercard has risen by some 30% over the course of 2018, while Visa’s share price is up around 20%.

The Global Equity fund was also a significant contributor to Portfolio performance. The multi-manager fund benefited from several of its constituent parts, among them the global equity element managed by Edgepoint. The manager boosted returns via an overweight to consumer staples and, within that, a holding in Shiseido, a Japanese cosmetics company. The company’s operating profits for the first three months of the year (published in the second quarter) beat the highest analyst estimate, aided by increased focus on high-end brands – its share price rose by more than 20% over the period.

The Balanced Managed also delivered positive absolute and relative returns over the period. Despite being underweight to IT, one of the quarter’s best-performing sectors on markets, it benefited from a major holding of almost 9% in Wirecard, a German technology and financial services company.

You may also like to access the full Managed Funds 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.

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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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