DJS Wealth Adviser LLP

Partner Practice of St. James's Place Wealth Management


to help you make informed decisions about your wealth

Conservative Portfolio Update - Spring 2018

20 April 2018

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

The Conservative Portfolio recorded a negative return over the quarter.

After 15 consecutive months of positive monthly returns, the short bout of volatility in early February took many investors by surprise. The S&P 500 fell rapidly, as did the broader MSCI World index. Losses were, however, relatively short lived. In technical terms, the drop was classified as a ‘correction’ (defined as 10% from its previous peak). Yet taking the quarter in isolation, global equities suffered – and where stock-specific issues were present this tended to hit some funds much harder than others.

The Global Equity and International Equity funds both performed poorly over the quarter as a result. Stocks in the UK were particularly impacted over the quarter, as international investors remained underweight UK equities (still waiting for a clear solution, and more certainty, on the Brexit conundrum), and a few high-profile stock-specific issues arose. Capita, the UK outsourcer, issued a profit warning in January that resulted in it losing £1 billion in market value in a single day’s trading. The CEO warned that a surfeit of recent acquisitions lay behind the company’s troubles. Capita lost more than 60% of its value over the three-month period; the Global Equity fund, a multi-manager fund, dropped significantly over the quarter, due in part to its limited exposure to the company.

The International Equity fund, managed by Magellan, was the worst performer over the quarter, but only accounts for 5% of the overall fund allocation. Exposure to financial companies, and specifically a significant holding in Wells Fargo, the world’s second-largest bank by market capitalisation, weighed on performance. The bank suffered badly during the broader February selloff and forfeited more than 18% of its market value across the quarter.

Across the banking sector more broadly, however, the first quarter provided tailwinds in the form of rising growth and inflation. These, in turn, are expected to persuade the Fed to continue on its path of interest rate rises, which will have the effect of making banks’ core business more profitable.

The Portfolio has over 40% exposure to fixed income funds and this helped to dampen the impact of equity market losses. The Corporate Bond fund slipped slightly over the period, as did the Investment Grade Corporate Bond fund, but both provided protection against the broader stock market sell-off.

You may also like to access the full Conservative 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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