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THE FUND OVERVIEW
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THE INVESTOR
PortfolioUpdates
THE INVESTOR CENTRE
T
he Balanced
Portfolio rose
slightly over the
quarter. The US election
result and Fed rate rise in
December pushed up the
dollar and helped the S&P
500 to its strongest year
of returns since the global
financial crisis.
The International Equity
fund performed strongly,
thanks to US large-caps.
“Market sentiment has
shifted towards growth-
oriented sectors, which
are perceived beneficiaries
of Trump’s policies… [like]
infrastructure and defence,”
said Hamish Douglass of
Magellan.
It was a difficult quarter
for theAsia Pacific and
Emerging Markets Equity
funds. In the former,
detractors included
multinational CK Hutchison.
“The surprise US election
result caused markets to
whipsaw,” said First State
StewartAsia, manager of
theAsia Pacific fund. “CK
Hutchison has a prudent
attitude to risk, a long-term
view on investment, and
has proven to be sensible
allocators of capital.”
T
he Managed Funds
Portfolio delivered
reasonable growth
over the quarter, capping
a year of strong returns.
Performance improved
significantly at major US
banks and energy majors,
while rising earnings
and DonaldTrump’s
infrastructure spending
plans contributed to an
improved corporate outlook.
Meanwhile, the OPEC
decision to cut oil production
helped push a barrel of Brent
crude above $50.
The Global Managed fund
outperformed the market
thanks to its biases to the
US and to financials.Top
performers in the fourth
quarter included Citizens
Financial Group, a US bank,
which rose 55%.
The Managed Growth
fund also benefited.
Not all funds in the
portfolio benefited.The
Balanced Managed fund,
managed byAXA Investment
Managers, rose by a more
subdued rate over the
quarter due to low energy
and financials exposure,
although its underweight
allocation to bonds paid off.
T
he Conservative
Portfolio delivered
moderate returns
during the fourth quarter.
Equity markets in the
US, Continental Europe
and the UK performed
strongly, while rising inflation
and interest rate shifts hit
government bonds.
The Investment Grade
Corporate Bond fund
performed well.
“The modest allocation to
high-yield credit continued to
add value,” said Ken Buntrock
of Loomis Sayles.“Positions in
selected banks, life insurance
and energy also contributed.”
DonaldTrump’s plans
to deregulate the energy
sector hit renewable energy
stocks, putting pressure on
theAlternativeAssets fund,
while a rising dollar harmed
emerging market debt,
although the fund performed
strongly over the year.
“There are early signs
of a potential rotation
away from new energy to
traditional natural resources,
benefiting timber and
negatively impacting clean
energy and clean water,” said
BlackRock, which manages
theAlternativeAssets fund.
R
eturns for the
Defensive Portfolio
over the final
quarter were muted.
Encouraging GDP, jobs
figures,Trump’s policy
pledges and Fed confidence
buoyed US equities.
TheWorldwide Managed
fund ended with a strong
quarter. Select Equity,
co-manager of the fund,
held BB&T Corp, a US
financial, which rose 25%.
Artisan Partners had high-
performing holdings in BNY
Mellon, Citigroup, UBS,
ING andTesco.
“Financial stocks
performed well due to
expectation of rising rates
and easing regulation,”
saidArtisan.
UK inflation rose, and
the Gilts fund, managed by
Wellington Management,
was a significant detractor
over the quarter.
“Most developed world
sovereign yields rose as
government bonds sold
off followingTrump’s win
and hawkish Fed rhetoric
following the increase to
the policy rate,” said Haluk
Solyan of Wellington
Management.
BALANCED
MANAGED FUNDS
CONSERVATIVE
DEFENSIVE
January 2017