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Conservative Portfolio Update - Autumn 2018

24 October 2018

Third quarter performance analysis for the St. James's Place Conservative Portfolio.

The Conservative Portfolio achieved a positive return over the period, boosted above all by global equities.

Global equities performed relatively strongly through the quarter, but on a regional basis it was a very differentiated story, as US indices far outpaced most of the rest of the world, and emerging markets continued to suffer. The Conservative Portfolio benefited from its exposure to US equities through the International Equity, Worldwide Opportunities and Global Equity funds.

In the US, the S&P 500 rose some 7% over the period. Yet even in the US, returns were deeply differentiated, with broader gains largely generated by a few major technology stocks and by the healthcare sector. The International Equity fund, managed by Magellan (based in Sydney), has a significant weighting to technology stocks, and made gains from its holding in Apple in particular. Over the course of the quarter, Apple became the first listed company in history to be valued at a trillion dollars; before the quarter was over, Amazon had become the second.

The Worldwide Opportunities fund, co-managed by Artisan, Burgundy and Select Equity, was also a major contributor to Portfolio returns. Artisan Partners has a significant weighting towards technology stocks, or stocks highly reliant on technology; one of its best performers was Visa, the US financial services company that majors in electronic transfers. Visa and Mastercard both outperformed their peers over the quarter, as confidence grew that their business models could profit through different points in the economic cycle. (Global digital transaction figures published by Statista show an increase in absolute terms of 17% this year against the same period in 2017.)

The Global Equity fund also contributed to broader Portfolio returns. The fund, which is co managed by Sands Capital, Edgepoint, Blackrock and JO Hambro, particularly benefited from exposure to industrial names. Edgepoint’s holding in Flowserve, a US manufacturer of industrial machinery (such as pumps, valves and seals), was a standout performer. The company’s share price was boosted by positive second quarter results, including sales that rose almost 11% (annualised).

The positive performance of corporate bonds across the quarter helped the performance of the Investment Grade Corporate Bond and International Corporate Bond funds, both of which contributed to overall Portfolio returns. The UK Absolute Return fund was a detractor.

You may also like to access the full Conservative 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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