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Balanced Portfolio Update - Spring 2018

20 April 2018

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

The Balanced Portfolio delivered a negative absolute return over the quarter.

Merger and acquisition activity escalated during the first three months of 2018, with more than $1.2 trillion in takeovers worldwide, 67% higher than the equivalent period in 2017. Although this created a good deal of excitement around target companies such as GKN and Shire, it also added to uncertainty in a number of sectors, including the telecoms sector. Among the fears felt on markets was the possibility of acquisitions by large companies putting the sustainability of future dividend payments under pressure.

The UK & General Progressive fund struggled over the quarter, due in part to its allocation to the telecoms sector. Notable holdings included Majedie’s position in Vodafone. The UK-listed telecoms behemoth lost some 17% of its market value as investors fretted about competitive trading conditions and about the impact of a possible deal to acquire a group of European cable operations from Liberty Global, a US telecoms and TV major.

Although both US and global stocks enjoyed continued momentum into January, the global market correction that played out on markets at the start of February quickly knocked more than 10% off the value of leading indices – although some of those losses have since been recovered. One of the economic areas to be hardest hit was the industrial sector.  The Global Equity fund suffered due to its significant exposure to industrial names, particularly across the equally-weighted core managed by BlackRock.

Although the initial spark for the February correction had been a rise in the yield on the US 10-year Treasury, anxieties over US trade protectionism – not least towards China – also increased over the period, due in part to strong tariff actions taken by Donald Trump.

Emerging market indices were hit especially hard as a result. Indeed, emerging equities recorded their worst week since September 2011, with a high proportion of the losses experienced on Chinese bourses – although China’s trading partners suffered too. The Emerging Market Equity and Asia Pacific funds both lost ground through the quarter.  The Emerging Market Equity fund, managed by Wasatch, suffered in part due to its high allocation to consumer staples companies, while poor performance in the telecoms sector weighed on the Asia Pacific fund.

The Property fund was a rare bright spot over the three-month period, and continues to benefit from the sector’s relatively strong performance in the UK commercial property sector since the post-EU referendum lull.

You may also like to access the full Balanced 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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