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Adventurous Portfolio Update - Spring 2018

20 April 2018

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

The Adventurous Portfolio delivered a negative return over the quarter.

As the year began, investors were enjoying the benefits of an extended period of coordinated global growth – the first since the financial crisis – and continued strength in corporate earnings.  The market correction in early February took many by surprise, at least in its timing. Moreover, it was a coordinated correction, impacting leading bond and equity indices right around the world, not least in the UK.

The FTSE 100 dropped by more than 7% over the three-month period, buffeted by negative and positive news alike. The global correction inevitably hurt companies listed in the UK, but its severity was heightened by the rise in the value of sterling.   The home currency enjoyed a strong quarter on the back of progress being made in Brexit negotiations, not least in the agreement of a transition period. When sterling goes up, the overseas earnings of London-listed companies go down in sterling terms.

The UK & General Progressive fund slipped significantly over the period, reflecting both challenges in the telecoms sector specifically and across equity markets generally.  The same UK factors affected the Greater European fund, managed by S. W. Mitchell Capital, as did its allocation to the hard-hit IT sector. The sector suffered on news of data leaks and threats of the regulatory screw being tightened by concerned governments worldwide.

The Emerging Market Equity fund, managed by Wasatch Advisors, saw its allocation to consumer staples detract from performance. LG Household and Healthcare, a South Korean consumer goods company, was among those to suffer mid-quarter on the rise in tensions resulting from the US trade tariffs, although the company was performing much better by late March. Some South Korean companies also benefited from the warming in US-North Korea relations, as Donald Trump agreed to meet with Kim Jong-Un for talks sometime before the summer.

Smaller companies were not immune to the broader downward shift and the Global Smaller Companies fund, managed by Paradice, also fell over the quarter. An allocation to the materials sector was an important detractor. More specifically, a position in Ferroglobe – a leading producer of metal alloys – weighed on performance, as an anti-dumping investigation failed to rule in its favour.

You may also like to access 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.

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