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Archived article

Balanced Portfolio Update

25 January 2018

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

The Balanced Portfolio delivered a positive return over the quarter, buoyed by bonds and equities alike.

The Federal Reserve left US interest rates on hold but announced it would begin to reverse its programme of quantitative easing in October – markets seemed to take the news in their stride. Both bond funds in the Portfolio performed well, supported by strong income streams – the Investment Grade Corporate Bond fund, managed by Loomis Sayles, and the International Corporate Bond fund, co-managed by Capital Four and Oaktree.

Global equities performed strongly through the quarter, and emerging markets outperformed developed markets. The Global Equity fund was a major contributor to Portfolio performance. Edgepoint, one of the fund’s co-managers, benefited from its holding in Shiseido, one of the oldest cosmetics companies in the world. In August, the Japanese company lifted its 2017 profits outlook on the back of improved sales in China.

A weak dollar buoyed emerging market stocks, which benefited from investors’ willingness to take on more risk.

Nevertheless, the Emerging Markets Equity fund, managed by Wasatch Investors, made a small loss. An underweight in the materials sector detracted from performance. The fund’s worst-performing stock was UPL, an Indian chemicals company.

The Asia Pacific fund, on the other hand, continued to deliver positive returns. Alistair Thompson of First State Stewart Asia, who manages the fund, benefited from his exposure to materials companies like Newcrest, and a holding in Koito, a Japanese manufacturer.

The Portfolio also has a weighting towards commercial property, which contributed to overall performance during the period. The Property fund, managed by Orchard Street, saw income rise as capital growth slowed. The Portfolio’s weighting to the UK commercial property sector was a positive contributor, despite continued business uncertainty in the UK.

“Markets are having to contend with a constant stream of unsettling messages around progress with Brexit negotiations,” says Philip Gadsden of Orchard Street. “Yet UK commercial property values have risen over the year to date and the independent IPF consensus forecast for the 2017 full year returns are more bullish than at the start of the year.”

You may also like to access the the full Balanced Portfolio Quarterly 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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