Adventurous Portfolio Update - Winter 2018
Fourth quarter performance analysis for the St. James's Place Adventurous Portfolio.
The Adventurous Portfolio fell over the period, as investor left equities behind in a flight to safety.
The range of fears felt by investors caused risk assets to fall in value over the quarter, even as global growth continued. The flight to safety led to price falls for all kinds of companies, large and small. The Global Smaller Companies fund, managed by Paradice, fell only marginally in the first three quarters of the year, but suffered in the fourth as investors dialled down their risk exposure.
Shifting sentiment towards US equities affected stocks right across the developed world over the period, as political volatility was felt on markets. Midterm elections in the US returned a Democrat-controlled Congress, making it far harder for Donald Trump to push through further market-boosting legislation, as he did with his earlier tax cuts package. As a result, many investors began to fret that growth might slow. The S&P 500 fell dramatically over the quarter, and the North American fund, managed by Aristotle, fell with it. The fund also suffered from a few specific detractors, among them General Electric.
Tremors from the US dip were felt in the UK and across Europe, although more localised issues also weighed on sentiment. In the UK, continued uncertainty around Brexit held foreign investors at bay, while economic growth remained disappointing. The UK & General Progressive fund, co-managed by Majedie and BlackRock, incurred losses over the period, having risen slightly over the first three quarters. Exposure to UK retail names weighed on performance, as microbrands continued to disrupt the sector.
In Europe, worries were not limited to Brexit. Extended anti-government demonstrations in France obliged the president to row back on some of his reforms, while Angela Merkel was left weakened by state elections and Rome faced off with Brussels over an expansionist budget. The Greater European Progressive fund, co-managed by Investec, outperformed the wider market but recorded a fall over the quarter. Performance was strong relative to the market due to exposure to select industrial companies, although the lack of exposure to the household and personal products sectors, both of which outperformed, hampered performance. Wirecard, a technology stock, was the main detractor; despite positive earnings, the broader tech sell-off took the company’s share price with it.
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.