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Conservative Portfolio Update

25 January 2018

Winter Review: Fourth quarter performance analysis for the Conservative Portfolio.

The Conservative Portfolio posted a positive return across the quarter.

It was an exceptional year for global equities, led by the S&P 500 in the US, which rose some 20% over the course of 2017. It was also a good year for emerging market equities, as improving growth and corporate earnings buoyed confidence on markets.  The Global Equity fund was a major contributor to performance over the course of the year, and especially in the fourth quarter. The equally-weighted core of the fund, which is managed by BlackRock, benefited from its exposure to emerging markets.

The International Equity fund was also a strong performer, improving on its 2016 performance thanks to the changing fortunes of IT stocks. In the US, internet majors far outperformed the broader market, aided by several quarters of strong corporate earnings. Magellan, which manages the fund, holds around 25% exposure to some of the biggest IT names, such as Apple and Alphabet, parent company of Google.  The fund also benefited from holdings in payment providers MasterCard, PayPal and Visa, although it sold PayPal in the final quarter due to the company’s high valuation. The fund posted its strongest quarterly performance for the year between October and December.

It was also a good final quarter for the Multi Asset fund. Payden & Rygel, co-manager on the fund, invests thematically across a global universe of government and corporate bonds, and benefited particularly from its high exposure to US mortgage-backed securities.

In the UK, politics remained significant on markets, as Theresa May lost her Commons majority but succeeded in winning EU approval to move to phase two of EU exit negotiations. Meanwhile, economic indicators delivered underwhelming news until late in the year. Demand for fixed income assets remained relatively constant through the year, only slipping slightly late in the year as economic confidence rose. Although the Bank of England raised rates in November, it was not expected to mark the beginning of a rapid hiking cycle.

You may also like to access the full Conservative Portfolio Update.


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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