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Adventurous Portfolio Update

25 January 2018

Winter Review: Fourth quarter performance analysis for the Adventurous Portfolio.

The Adventurous Portfolio delivered a positive return over the quarter.

Over the course of 2017, global economic growth became increasingly coordinated. In the third quarter, the growth rate in the eurozone was above that of the US and UK, which had been unthinkable through most of the recovery after the global financial crisis, although initial signals suggested it slipped slightly in the fourth quarter.

The Greater European fund performed strongly over the course of the year. S. W. Mitchell Capital, co-manager of the fund, achieved strong growth over 2017, largely due to positive stock selection in the consumer discretionary and IT sectors. Among the best performers were STMicroelectronics, a French semiconductor manufacturer – and  Volkswagen, whose stock price rose significantly during the second half of the year, as the market fallout from the emissions scandal began to clear.

As equity markets gained momentum, investors looked beyond the largest global names, offering increasing support to smaller companies. The Global Smaller Companies fund, which is managed by Paradice Investment Management, recorded a strong final quarter, thanks in part to exposure to the industrial sector. Disappointing revenues weighed on the price of Astronics, a US aerospace electronics company, over the summer; but the stock surged thereafter, rising around 40% in the fourth quarter.

In the US, indices were supported by strong performance in the financial sector. Donald Trump’s success in winning passage of his tax-cuts bill through Congress also precipitated a last surge on markets in the final trading days of the year. The North American fund delivered healthy returns in the final three months of the year, playing a significant part in Portfolio performance. Lennar Corp, a home construction company, saw a high number of new orders midyear after hurricanes struck Texas, Florida, Georgia and South Carolina – the four states account for some 40% of the company’s annual homebuilding revenues.

The FTSE 100 delivered much lower returns than the S&P 500 through the last three months of the year, and this was partly reflected in the more muted returns posted by the UK & General Progressive fund. Although the fund still posted a positive return, it was held back by allocations to Merlin, Auto Trader and two UK energy companies, Centrica and SSE. These last two suffered price falls following the government’s October announcement of a price cap on energy bills.

You may also like to access the full Adventurous 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.

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