to help you make informed decisions about your wealth
Archived article

Immediate Income Portfolio Update

25 January 2018

Winter Review: Fourth quarter performance update for the Immediate Income Portfolio.

The Immediate Income Portfolio achieved positive growth across the year, rising in every quarter.

The Strategic Income fund was a major contributor to Portfolio growth, and returns were driven in part by the fund’s high exposure to emerging market debt. BlueBay, which manages the emerging market debt element of the fund, benefited from this trend over the course of the year. In part, these price rises were the result of declining concerns over the impact of Federal Reserve rate hikes on emerging market fixed income markets. Broad-based growth across emerging markets was also a significant contributing factor.

As ever, one of the key metrics was corporate default rates and, on this score, the environment was much improved.

“In the final quarter, it was positive to see the [corporate] deleveraging theme continue to play out, and hence we witnessed a big year-on-year decline in default rates,” said Polina Kurdyavko of BlueBay Asset Management. “The emerging market high yield default rate ended the year at 2%, which was significantly lower than the 2016 rate of 5.1% and lower than market expectations.”

The Corporate Bond and Diversified Bond funds also benefited from rising prices in fixed income markets in the final quarter. The Corporate Bond fund’s allocation to high yield bonds provided further positive momentum, while subdued long-term inflation expectations served to reassure investors about potential downside for fixed interest assets.

Yet it was equities that stole the show in the last three months of the year, bolstered in part by the improved economic outlook, not least in the US and Japan.  The Global Equity Income and Worldwide Income funds both profited from these trends, as well as from positive stock selection. Manulife, manager of the Global Equity Income fund, benefited from an underweight position in the utilities sector and from holding financial names, such as Wells Fargo.

“We benefited from credit selection in retail, such as food and drugs,” said Sheldon Stone of Oaktree Capital, which manages the US element of the International Corporate Bond fund. “However, we suffered due to our avoidance of the strongly performing home-builders sector. Looking ahead, the potential for higher interest rates, and President’s Trump’s policies, could create volatility; but growth and stable credit fundamentals are positives.”

You may also like to access the the full Immediate Income 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.


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.