DISCRETIONARY INVESTMENT MANAGEMENT SERVICE
QUARTERLY FOCUS
A discretionary managed investment solution, using a multi-asset approach, designed to cover a number of different risk profiles to meet a range of client needs and goals.
Fourth Quarter 2017
PORTFOLIO
PERFORMANCE
All strategies saw solid gains over the quarter. Our modest tilt towards equities supported performance as global stocks continued to rise. Leading indices including the FTSE 100, Dow Jones Industrial Average and S&P 500 reached record levels, while Japan’s Nikkei 225 reached a 25-year high.
Our positions in Japanese and emerging market equities were particularly strong contributors to performance, returning 9% and 7% respectively in a balanced strategy in Q4. Our tactical positions in Europe and global technology also did well.
On the bond side, our preference for corporate and financial credit continued to add to performance as robust global growth contributed to low volatility and low levels of defaults. Our preference for peripheral countries in Europe within our government bond position is also adding to performance as the eurozone economy strengthens. Portugal, for example, regained its investment grade status from rating agencies Standard & Poor’s and Fitch near the end of the year.
Our disciplined investment process and core investment principles underpin our decision making:
- Macro-informed allocation –we continue to see synchronised global growth supporting risk assets and maintain a preference for equities and credit over low yielding government bonds. For example, we increased our emerging market local currency debt exposure in Q4 as we see it as attractively valued for the level of yield available – and with potential to benefit from local currencies appreciating against the US dollar.
- Quality – Our 30-stock global best ideas portfolio draws on innovative quantitative and tactical analysis to support our bottom-up fundamental research. We seek to identify companies that best reflect the tactical and strategic opportunities we have identified, in line with our core investment principles of quality and value.
- Diversification – the quarter has been characterised by solid performance across a number of sectors and regions. By making sure we have a diversified portfolio we’ve been able to tap into the different sources of return that drove markets in Q4.
| Portfolio returns, after fees | Wealth Preservation | Wealth Enhancement (Medium Term) | Wealth Enhancement (Long Term) | Wealth Generation | Diversified Bond |
|---|---|---|---|---|---|
| Last Quarter | 2.0% | 3.1% | 4.0% | 4.5% | 0.8% |
| Rolling 12 Months: | |||||
| End dec 16 to end dec 17 | 6.5% | 9.4% | 11.4% | 12.1% | 5.6% |
| End dec 15 to end dec 16 | 9.7% | 13.0% | 14.8% | 18.7% | 7.7% |
| End dec 14 to end dec 15 | 0.3% | -0.1% | 1.1% | 1.2% | -2.5% |
| End dec 13 to end dec 14 | 6.8% | 4.7% | 3.1% | 2.3% | 4.6% |
| End dec 12 to end dec 13 | 0.0% | 3.1% | 11.2% | 12.9% | -1.1% |
| Source: Coutts/Thomson Datastream | |||||
Past performance should not be taken as a guide to future performance.
The value of investments, and the income from them, can go down as well as up, and you may not recover the amount of your original investment.
Individual portfolio returns may vary.
| Charity and Trust Portfolio Returns, after fees | Charities and Trust |
Charity Wealth Preservation | Charity Wealth Enhancement (Medium Term) | Charity Wealth Enhancement (Long term) | Charity Wealth Generation |
|---|---|---|---|---|---|
| Last Quarter | 2.7% | 2.1% | 3..2% | 4.0% | 4.3% |
| Rolling 12 Months: | |||||
| End dec 16 to end dec 17 |
8.4% | 6.0% | 9.4% | 11.2% | 11.1% |
| End dec 15 to end dec 16 | 12.6% | 9.5% | 12.8% | 14.5% | 17.6% |
| End dec 14 to end dec 15 | -1.6% | 0.0% | 0.0% | 0.6% | -0.5% |
| End dec 13 to end dec 14 | 4.5% | 7.3% | 4.9% | 3.0% | 2.0% |
| End dec 12 to end dec 13 | 6.1% | 0.5% | 6.4% | 11.4% | 12.1% |
| Source: Coutts/Thomson Datastream | |||||
The value of investments and any income from them can go down as well as up, and you may not recover the amount of your original investment. Past performance should not be taken as a guide to future performance, please note the performance of individual portfolios may vary.
Holdings and
Portfolio Update
Broadly, our positioning remains unchanged as we continue to have confidence in the make-up of our portfolios. Our modest preference for equities should continue to benefit from global growth while government bonds continue to look expensive, encouraging our low exposure to gilts in favour of corporate credit and alternative investments.
We have increased our allocation to alternatives such as UK commercial property and absolute return strategies. Alternative assets and strategies with a low or negative correlation to equities can help mitigate the risk of large falls in equity or bond markets and continue to be attractive in our view. For example, absolute return strategies have the potential to make money in a range of market environments.
We have also increased our exposure to the energy market within our ‘Global 30’ basket of direct equities to ensure we are well positioned to take advantage of the better balance between production and inventory levels within the oil industry.
(Please note: not all positioning changes will be relevant for all portfolios)
For a full breakdown of all the underlying funds within the strategies, please refer to our monthly factsheets, available from your private banker or wealth manager.
The value of investments and any income from them can go down as well as up, and you may not recover the amount of your original investment. Where an investment involves exposure to a foreign currency, changes in rates of exchange may cause the value of the investment, and the income from it, to go up or down.
In the case of some investments, they may be illiquid and there may be no recognised market for them and it may therefore be difficult for you to deal in them or obtain reliable information about their value or the extent of the risks to which they are exposed.
Investments in emerging markets are subject to certain special risks, which include, for example, a certain degree of political instability, relatively unpredictable financial market trends and economic growth patterns, a financial market that is still in the development stage and a weak economy.
