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THE INVESTOR
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T
heAdventurous
Portfolio performed
strongly in 2016.
The S&P 500 had a
remarkable run over the
fourth quarter, but the
NorthAmerican fund,
managed byAristotle Capital
Management, outperformed
it by five percentage points.
A rising oil price and Fed
rate rise aided financials,
including Bank ofAmerica
(BoA) –Aristotle’s BoA
holding was more than three
times the index weighting.
“The [post-Trump]
rebound was felt in financials,
industrials and materials,”
saidAristotle’s Jim
Henderson. “The prospects
of marginally higher rates
[pushed] Morgan Stanley and
BoA up over 30%.”
The Global Smaller
Companies fund also
performed strongly.
“US small caps have been
on an absolute tear since
9 November,” said
Kevin Beck of Paradice
Investments. “Many of our
holdings have benefited, but
this reflects our approach of
holding a low-risk, balanced
portfolio that should thrive
under a variety of scenarios.”
The Deferred Income Portfolio delivered
good growth in the second half of the
year after a slow start to 2016.
The Global Equity Income fund,
managed by Manulife, performed
throughout 2016. Huntington
Bancshares, a US financial and a
significant overweight position, rose
42% in the fourth quarter.
“We are maintaining an underweight
position in European financials …
The Balanced Income Portfolio delivered
a reasonable growth level over 2016.
UK-centric companies lost favour
post-Brexit vote, but the Equity Income
fund benefited from both international
and UK exposures.
“The fund’s holdings in Tesco, Sky
and RBS performed well in recent
weeks,” said Nick Purves of RWC
Partners, lead manager of the Equity
Income fund.
The Immediate Income Portfolio
delivered positive returns over the
course of the year.
The Global Equity fund, managed by
Manulife, performed strongly, benefiting
from overweights in the financial and
IT sectors.
After a tough third quarter, the
Property fund, managed by Orchard
Street, ended the year well, and
acquired the Kingsway Retail Park in
FUND OVERVIEWS
ADVENTUROUS
INCOME PORTFOLIOS
DEFERRED INCOME
BALANCED INCOME
IMMEDIATE INCOME
offset by a reasonable exposure to US
financials,” said Paul Boyne of Manulife.
After a difficult first half of 2016, the
UK Income fund performed well, helped
by holdings in Legal & General,Aviva
and Delta Lloyd.
The UK High Income fund suffered in
the final quarter due to limited energy
and financials exposure, while the
Strategic Income fund slowed towards
the end of a strong year.
So too did the UK & International
Income fund, managed by Artemis
Partners. “Cue a switch away from fully-
priced bond proxies to oil, miners and
banks … our sale of Reckitt Benkiser
was well-timed,” said Adrian Frost of
Artemis.
The major detractor in the portfolio
was the UK High Income fund, managed
byWoodford Investment Management,
due to low exposure to energy stocks.
Derby for £57.3 million.
The Gilts fund, managed by
Wellington Management, was the major
detractor, as government bond yields
rose on both sides of the Atlantic.
The International Corporate Bond
fund detracted from performance, but
there were positive fourth-quarter
returns from the Diversified Bond fund,
Investment Grade Corporate Bond fund
and Corporate Bond fund.
Most developed world sovereign yields rose as
government bonds sold off following Trump’s win
and hawkish Fed rhetoric