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Managed Funds Portfolio Update - Autumn 2018

24 October 2018

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

The Managed Funds Portfolio delivered a positive return over the period, with all constituent funds making a positive contribution.

Over the period, the significant performance gap between stock markets around the world yawned still wider, as emerging markets suffered a series of political and economic crises; fresh export tariffs; and a rising US dollar. Stocks in the US, however, grew at an exceptional rate; the S&P 500 rose some 7% over the quarter despite increasing trade tensions. The US technology sector outperformed even this broader benchmark, as profits continued to escalate.

The International Equity fund, managed by Magellan, was the major contributor to Portfolio returns through the quarter, and the tech sector provided most of the reasons. Facebook, however, bucked the trend, losing some 19% of its value immediately after opening one morning, following the company’s chief financial officer comment that growth would “continue to decelerate” as subscriber growth stalled. Magellan, however, saw no good reason to sell.

“Facebook still has multiple large platforms that are under-monetised, including Instagram, Messenger, WhatsApp and video across [various] platforms,” said Magellan’s Hamish Douglass. “The results were actually very strong, with revenues up 42%. Moreover, the share price reaction [merely] unwinds extraordinary gains over the previous two months.”

The Global Equity fund, co-managed by Sands Capital, Edgepoint, Blackrock and JO Hambro, also made a significant contribution to performance. Sands Capital’s holding in Illumina, a US healthcare company that analyses genetic variation, was a particular highlight. Illumina’s considerable rise was down to various reasons, among them the China National Drug Administration’s decision to approve a second-generation DNA sequencer produced by the company.

Strong performance in the healthcare sector helped the Balanced Managed fund, which benefited from exposure to AstraZeneca. The sector’s rise also lay behind some of the returns delivered by the Strategic Income fund, co-managed by MidOcean, Schroders, Bluebay and TwentyFour. Pfizer, one of the world’s biggest pharmaceutical companies, was a significant positive contributor. The 169-year old company reported solid second quarter results, especially on revenue, and also announced a restructuring.

The Managed Growth fund also contributed to Portfolio performance. Anglo American and South32, mining companies, were top contributors as results outperformed expectations. Wm Morrison, the supermarket chain, and HSBC were two UK companies that boosted performance, although Pearson was a detractor.

You may also like to access the full Managed Funds 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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