to help you make informed decisions about your wealth

Balanced Income Portfolio Update - Winter 2018

23 January 2019

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

Having performed positively across the first nine months of 2018, the Balanced Income Portfolio delivered a negative return in the fourth quarter.

Many asset classes struggled through the quarter, as investors grew increasingly nervous about both headline growth and the outlook for a range of key sectors, among them retail. Retail figures in the UK showed a surprise fall early in the period, and numbers released since Christmas suggest a far-from-festive period for several major High Street names. Despite these headwinds, the UK commercial property market was relatively stable through the quarter and showed only a limited decline for 2018 as a whole. The Property fund, managed by Orchard Street, did slip in the final quarter, but only marginally relative to both the wider property market and to risk assets more broadly. The fund was also helped by its relatively high allocation to out-of-town retail assets.

“The fourth quarter did see out-of-town dragged into the wider malaise affecting the town centre market, but vacancy rates in out-of-town retail are still significantly lower than in town centres, and the occupancy rate for the retail component of the fund stood at 97% at year-end,” said John Humberstone of Orchard Street. “Notably, UK institutions were net investors over the year, following two years of disinvestment.”

The UK equity market continued to disappoint over the period. Although UK employment remained elevated, growth was sluggish and there were signs of business investment slowing. The UK High Income fund, managed by Woodford Investment Management, detracted from Portfolio performance, hit by both sectoral and stock-specific issues. Capita, the outsourcing company, saw its stock price decline yet further in the final quarter, largely due to a receiving a public rebuke from the British Medical Association for its failure to send more than 48,000 letters to women to inform them of the dates and results of cervical cancer screening.

Another detractor was the Strategic Income fund, a multi-manager mandate. MidOcean manages the US high yield bond component of the fund, which suffered from a broader sell-off of US high yield bonds in October. TwentyFour Asset Management, which manages the European high yield bond component, suffered due to investor nervousness over Italy’s budget and, later in the quarter, social unrest in France, which led the government to slacken its timeline for reducing government indebtedness.

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.


We value your opinion

We are always looking for ways to improve our service, so if there is something you think we could do better, or that you think we are doing really well, we would love to hear from you.

The only thing we ask is that you do not include any personal information, like account numbers, in your email. If your matter is urgent, needing our personal attention, please contact your local office.

You may be contacted to follow up on your comments.


If you wish to complain about any aspect of our service, we will do what we can not only to meet, but exceed your expectations of a swift and thorough resolution. More details of our complaints procedure can be found here.