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Immediate Income Portfolio Update - Summer 2018

20 July 2018

Second quarter performance analysis for the St. James's Place Immediate Income Portfolio.

The Immediate Income Portfolio delivered a positive return over the quarter.

As ever, markets were highly responsive to economic and financial developments and data in the US. Despite concerns over trade protectionism, sentiment was largely positive, given a good GDP growth rate, low unemployment and an exceptional round of corporate earnings. Yet while this contributed to bullish sentiment on equity markets, it also added to expectations that the Federal Reserve would continue on its path of interest rate rises. The Fed did proceed with raising interest rates in June and is expected to raise rates twice more this year. Bond indices remained relatively flat over the quarter; the yield on the 10-year US Treasury did break through 3% for the first time in four years, before slipping back.

This widening difference in the performance of bond and equity markets was reflected in the Immediate Income Portfolio. The Strategic Income fund, managed by Schroders, MidOcean, TwentyFour and BlueBay, slipped a little over the period. In part, this reflected its allocation to bonds in emerging markets, which were hit by a combination of factors: a rising dollar (which pushed up the value of dollar-denominated debts); increasing trade protectionism from Washington; and slowing growth in a few key markets. Oil-importing emerging markets were also severely hit by the high oil price. The Diversified Bond fund, co-managed by Brigade, Payden & Rygel and TwentyFour, also fell, but losses were more marginal. These partly reflected investors stepping back from longer-dated debt, due to rising expectations of further interest rate rises to come.

Yet the key drivers of Portfolio performance across the three-month period were the Global Equity Income and Worldwide Income funds, managed by Manulife and Investec respectively. The Worldwide Income fund rose in value due to both broader market trends and individual stock selection. An overweight to 21st Century Fox, the US media major, was particularly profitable. The stock rose some 40%, as Sky’s bid to purchase the company received the green light from the UK government, subject to selling off Sky News (with Disney currently the most likely buyer). But Sky’s bid only accounted for part of Fox’s share price rise – the rest came thanks to a rival bid by Comcast, a US telecoms company.

Finally, the Property fund also made a small positive contribution to overall performance.

You may also like to access the full Immediate Income 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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