Matthew Newton Wealth Management Ltd

Senior Partner Practice of St. James's Place Wealth Management


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Archived article

Balanced Income Portfolio Update

25 January 2018

Winter Review: Fourth quarter performance analysis for the Balanced Income Portfolio.

The Balanced Income Portfolio performed well in the fourth quarter, supported by its exposure to equity markets.

The MSCI World Index rose by more than 20% over the course of 2017, reflecting a significant improvement in global growth rates and corporate earnings. The FTSE 100 rose by a more subdued 7.6%, although posted most of its returns in the final quarter. A combination of global tailwinds and good stock selection ensured a good end to the year for the UK & International Income fund, which is managed by Artemis.  The manager added positions in Anglo American, a mining major, and Vivendi, the French media conglomerate, in the final quarter.

The Global Equity Income fund, which is managed by Manulife, delivered healthy returns over the quarter. New names added over the period included Airbus, Direct Line and Michelin. Nevertheless, the manager expressed caution about the outlook. “Our analysis shows that leverage levels have risen, even as profit margins appear to be near peak levels,” said Paul Boyne, who manages the fund. “The biggest risks we see result from high global valuations and high debt levels. We view US financials and sustainable quality franchises within the consumer staples sector positively.”

The Strategic Income fund was a major contributor to performance over the year as a whole. Schroders, which manages the high-dividend equity portion of the fund, benefited from its quality bias, outperforming the wider market. Gains were held in check, however, by a lack of exposure to the IT sector.

Rising global confidence was reflected on fixed interest markets, as bond investors pushed out beyond investment grade bonds and into the high yield segment of the market. Figures released by Bank of America Merrill Lynch show that the US high yield market returned 0.41% over the final quarter of the year, although performance varied significantly between sectors. The Diversified Bond fund performed strongly in the final quarter. Brigade, which manages the US high yield segment of the fund, benefited from its position in New Albertson’s, a grocery and drug stores company. Comments made by Donald Trump about wiping out Puerto Rico’s debt weighed on the manager’s holdings of Puerto Rico General Obligation bonds.

You may also like to access the the full Balanced Income 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.

FTSE International Limited (“FTSE”) © FTSE 2018. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under licence. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, endorsed, reviewed or produced by MSCI. None of the MSCI data is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such.



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