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Balanced Income Portfolio Update - Spring 2018

20 April 2018

First quarter performance analysis for the St. James's Place Balanced Income Portfolio.

The Balanced Income Portfolio fell over the quarter.

While fixed income performance was mixed over the period, higher risk bonds did worse than better-quality issues. The trajectory of equity markets was more consistently negative.  The trend came despite relatively positive corporate earnings reports for 2017, not least in the US. Among the most impressive annual results were those of the technology majors, and yet several of them suffered a poor quarter, due in no small part to a data privacy failure at Facebook and ensuing fears about regulatory tightening.

Although the UK High Income fund, managed by Woodford Investment Management, has a relatively small allocation to the technology sector, it suffered considerably due to a holding in Micro Focus.  The UK software and IT company lost more than half its listed value over the period, following a profit warning and the departure of its CEO after just six months in the post.

While share price trouble for the technology sector was largely limited to the big names, the telecoms sector suffered a more general decline over the period.  The UK & International Income fund, managed by Artemis, detracted from Portfolio performance during the quarter, suffering in part due to its exposure to the telecoms sector and, more specifically, to Inmarsat, the London-based satellite communications company.

The company cut its dividend in order to invest in its aviation division, following an earnings dip in the fourth quarter. While some long-term investors may view this as a far-sighted reallocation of capital, short-term investors are likely to have been unimpressed. Inmarsat cited the “lack of visibility” over future cash payments from Ligado Networks, its satellite communications supplier, as one reason for the rethink.

The Worldwide Income and Global Equity funds, managed by Investec and Manulife respectively, were the most significant detractors from Portfolio performance, however.  The latter suffered due to its telecoms holdings, while the Worldwide Income fund saw its high allocation to consumer staples hit returns.

While bonds also suffered over the quarter, price falls were generally much smaller than on equity markets.  The Diversified Bond and Investment Grade Corporate Bond funds both fell over the period, but by relatively small amounts, thereby limiting the contribution to Portfolio losses. The multi-manager Strategic Income fund, which invests across corporate bonds, government bonds and equities, saw negative performance across the quarter, but losses were muted as the fund’s bond exposure helped to limit losses.

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.

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