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behaviour frommanagement (a political
corruption case looms over members
of the senior executive team) and the
hangover from last year’s exploding
phone fiasco, both the share price and
balance sheet remain strong.
The MultiAsset fund also
recorded a positive return.While
underperforming equity markets in
relative terms, the fund contributed
to overall growth despite its low-risk,
defensive approach.TheAbsolute
Return Bond strategy – managed by
the team at Payden & Rygel – benefited
from exposure to more cyclical sectors
of the high-yield bond market. In
addition, with market volatility at low
levels not seen since before the global
financial crisis, the volatility-controlled
equity element of the MultiAsset
fund, managed by Schroders, rallied in
favourable conditions.
Shareholders reacted unfavourably to
less optimistic forward guidance from
Serco – the UK-listed outsourcing
specialist – and this proved the biggest
detractor for the UKAbsolute Return
fund.The investment team at BlackRock
retains a cautious outlook for markets
in general, which is reflected in the
overall market exposure for the
strategy.This was another headwind as
equity markets pushed on during the
early part of the year.
The Gilts fund was another fund
that performed poorly, although it too
posted a positive absolute return. It also
THE PORTFOLIO REVIEW
28
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THE INVESTOR
Portfoliooverviews
THE INVESTOR CENTRE
W
ith a higher allocation
to risk assets, and
despite its lower-
risk profile, the
Conservative Portfolio achieved a
decent return over the first quarter.
Global equity exposure through the
Worldwide Managed fund, plus holdings
in the Global Equity and International
Equity funds, provided the majority of
positive performance.
The Global Equity fund was the
best-performing fund in the Portfolio
over the quarter.More specifically, it
was the equally weighted global equity
‘core’ element, managed by BlackRock,
that provided the greatest contribution.
This strategy has significant exposure
to emerging market equities, which
was the best-performing region during
the period, further demonstrating an
increased appetite for risk assets.
Sands Capital, one of the satellite
managers in the fund, also recorded
strong returns as both exposures to
CONSERVATIVE
Spring 2017
T
he Defensive Portfolio
delivered a positive return
over the first quarter
of 2017, despite its lower-
risk positioning.
As investors reached for higher-risk
assets – predominantly equities – it’s no
surprise that theWorldwide Managed
fund, a global equity strategy, led the
way in performance terms. Despite the
so-called‘Trump rally’ giving way to
what the media coined a‘Trump slump’,
it was equity markets that afforded
investors the best returns.The IT sector
was the best-performing over the period
and theWorldwide Managed fund, with
more than 19% exposure, was well-
positioned to take advantage. Shares
in US-listed Oracle, held by Burgundy
Asset Management, rose more than
15% over the quarter as the computing
firm posted quarterly earnings ahead of
analysts’ expectations.Artisan Partners,
co-manager of theWorldwide Managed
fund, pointed to Samsung Electronics
as another key contributor from the
tech sector. Despite some nefarious
DEFENSIVE
reversed the negative growth of the
fourth quarter of 2016. Sovereign bonds
and investment grade (high-quality)
corporate debt were among the weakest
parts of the fixed-interest universe over
the period, as investors looked further
down the credit spectrum in search for
income and better returns.
Growth
Portfolios