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Balanced Income Portfolio Update - Autumn 2018

24 October 2018

Third quarter performance analysis for the Balanced Income Portfolio.

The Balanced Income Portfolio achieved a positive return over the period, largely aided by global equities, as bond performance was more mixed.

Although the S&P 500 delivered exceptionally strong performance across the quarter, the technology and healthcare sectors performed especially well.

The Worldwide Income fund, managed by Investec, has a high allocation to technology stocks but was particularly buoyed by its holding of Microsoft. The US technology giant rose some 16% over the period. There were several reasons but among them was Microsoft Azure Cloud, its cloud computing service, which achieved 98% revenue growth in the second quarter.

On the other hand, the Global Equity Income fund, managed by Manulife, benefited generally from its healthcare exposure. One strong performer was Novartis, a Swiss pharmaceutical multinational, which gained some 14% over the period, partly due to strong second-quarter profits.

Corporate bonds also enjoyed a good quarter, largely bucking troubles in the sovereign bond market. One highlight was the Strategic Income fund, co-managed by Schroder, TwentyFour, MidOcean and Bluebay. For its part, MidOcean benefited from APX Group, an energy exchange. The Diversified Bond fund also lifted the Portfolio, aided by exposure to Sprint Corp, as reports emerged that the Department of Justice was giving increasingly serious consideration to a proposed merger of Sprint and T-Mobile. The Investment Grade Corporate Bond fund added its own, more marginal support to Portfolio performance.

The Property fund, managed by Orchard Street, was another positive performer. In August, the fund completed purchase of a £38.5 million property at 27-35 Mortimer Street in the busy Fitzrovia district of central London. The commercial property, which has 22,141 square feet of office accommodation and 8,942 square feet of retail accommodation, is already fully let to Sainsbury’s on the ground floor.

The UK delivered mixed economic signals over the period, with some encouraging retail figures, a middling GDP growth rate, and disappointing business investment trends. Brexit uncertainty also rose as Theresa May’s Chequers deal won many enemies. The UK High Income and UK & International Income funds both struggled through the period, weighing on Portfolio performance.

The UK & International Income fund, managed by Artemis, slipped due to its high allocation to consumer discretionary stocks and, on an individual stock basis, its holding in Informa, a global events and publishing company based in London. The UK High Income fund, managed by Woodford, saw British American Tobacco detract from returns.

You may also like to access the full Balanced Income 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.

© S&P Dow Jones LLC 2018; all rights reserved


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