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Balanced Portfolio Update - Winter 2018

23 January 2019

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

The Balanced Portfolio delivered a negative return over the period, reversing gains made earlier in the year.

Uncertainty stalked UK markets. Brexit uncertainty was thought to lie behind Philip Hammond’s Budget timidity, while the prime minister felt obliged to delay the parliamentary vote on her Brexit deal due to expectations she would lose it. Siren warnings from business only added to nerves among investors.

The UK & General Progressive fund, co-managed by Majedie and BlackRock, suffered from the risk-off sentiment over the period. Despite reporting above-par results, Electrocomponents, a UK electronics and industrial distributor, detracted from performance after three years of a rising stock price. In part, this reflected an investor shift from growth stocks to value stocks. Tesco, more perplexingly, also detracted from performance, despite the lack of negative news, although it may have been tarred with the Brexit brush, given worries over the outlook for UK retail in the short term.

More significantly for global assets, the oil price fell some $30 to end the quarter below $55 for a barrel of Brent crude. Such moves generally have sharp market effects for oil importers and exporters alike, as well as for major energy companies. Ensco and BP both suffered over the period, contributing further to losses on the UK & General Progressive fund. However, performance was helped by what the fund did not hold, notably British American Tobacco, as investors fretted over growing US regulatory pressure on the tobacco sector.

Global equity markets were perhaps hit hardest by slowing Chinese growth; expectations that US growth would slow in the near future; and the rise in tensions between the two countries. The Global Equity and Worldwide Opportunities funds, both multi-manager funds, detracted from Portfolio performance through the quarter. So too did the International Equity fund, although it was a net contributor over the year as a whole.

If equities struggled through the period, so too did corporate bonds. The International Corporate Bond and Investment Grade Corporate Bond funds both slipped over the quarter. The International Corporate Bond fund, co-managed by Capital Four and Oaktree, effectively made all its 2018 losses in the final three months, suffering due to its European bias just as European growth was slowing. AA, Heatwave and Veritas all weighed on performance. The Investment Grade Corporate Bond fund, managed by Loomis Sayles, suffered from credit selection in the banking sector.

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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