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Strategic Growth Portfolio Update - Spring 2018

20 April 2018

First quarter performance analysis for the St. James's Place Strategic Growth Portfolio.

The Strategic Growth Portfolio fell over the quarter.

In the final months of 2017 and through into January, the technology sector had been at the forefront of the global bull market, pushing equity indices ever higher on a combination of rapidly-rising profits and growing investor enthusiasm. But February’s correction reminded investors that markets don’t always move upwards. While technology stocks were not the immediate cause for the correction, some of the largest names in the sector have struggled since on both corporate and political developments.

Facebook was the most severely affected of the major technology names; reports emerged that it had failed to protect private user data, and that the same private data had then been used in both the US election and Brexit campaigns. In March alone, the company lost 12% of its market value as investors sold out. Yet worries over Facebook have sparked broader concerns that tighter government regulation for the sector is now all but inevitable, potentially harming profitability.

One of the many companies to suffer on markets as a result was Sage Group, the UK’s second-largest technology company. Its share price lost almost 17% over the quarter and was a contributor to the negative performance of the Greater European Progressive fund, managed by S. W. Mitchell Capital. The fund also had a significant weighting to the IT sector more broadly, which added to its poor performance.

The broad stock market fall in February affected companies across all sectors in the US, but some were quicker to bounce back than others. The consumer staples sector took a further dip in mid-March.

The North American fund, managed by Aristotle, suffered from its overweighting to the consumer staples sector. A standout detractor was Walgreens Boots Alliance, the US pharmacy operator. Short-term price weakness could have been attributed to its attempt to buy AmersourceBergen. However, talks fizzled without a deal being struck. The sector continues to see significant consolidation.

While stocks suffered significantly over the quarter, losses on bond markets were much more muted, in part reflecting their lower risk profile. As a result, the Diversified Bond and Investment Grade Corporate Bond funds, which together account for a quarter of the Portfolio, held total losses in check.

You may also like to access the full Strategic Growth 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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