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systems for diabetics, gained as
uncertainty over the future of drug
pricing receded.
Leading the way was the Global
Equity fund, in which exposure to
emerging markets and technology
names boosted performance over
the quarter. Consumer-facing sectors
also posted strong returns. EdgePoint
Wealth Management, based inToronto,
one of the satellite managers of the
fund, reaped the rewards from its
holding in Nestlé. Despite posting
a fifth consecutive year of falling
growth, and with consumers
questioning the impact of the chocolate
giant’s commitment to cut the sugar
content in its confectionery by 10%
by 2018, its share price was up 5% over
the quarter.
A return to favour for value investing,
at the expense of a growth or quality
THE PORTFOLIO REVIEW
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THE INVESTOR
Portfoliooverviews
THE INVESTOR CENTRE
Spring 2017
The outperformance
from a true deep
value portfolio
represents the
most attractive
opportunity
on the outlook for European senior
secured high-yield bonds, despite the
challenges impacting markets currently,
and continues to find new opportunities
to invest.‘We participated in a number
of attractive new bond issues during the
quarter, ranging from global companies
in the packaging industry to senior
secured bonds fromUK and Swiss
technology, media and telecoms
companies.We remain underweight in
the energy sector as we remain cautious
on cyclical commodity-related names,’
said Lead Portfolio Manager Sandro Näf.
T
he Managed Funds Portfolio
benefited from its heavy
exposure to equities
and outperformed the
headline UK index, the FTSE 100,
over the period. However, this doesn’t
tell the whole story as each of the funds
in the Portfolio positively contributed
to returns.
The Global Managed fund was among
the stronger performers, as healthcare
names (in addition to those in the IT
sector) rallied. PresidentTrump’s failure
to repeal theAffordable CareAct –
colloquially known as Obamacare –
provided a welcome boost to associated
sectors.The fund’s holding in US-listed
Dexcom, a company which
manufactures glucose monitoring
MANAGED FUNDS
approach, reflected stronger
performance from the Managed Growth
fund.The‘deep value’ style, adopted by
Nick Kirrage and Kevin Murphy of
Schroders within the UK equity element
of the fund, provided a welcome boost.
However, while returns from this
approach are attractive over the long
term, time is an important commodity
for value investors. Kirrage recently
restated why he remains committed to
this approach:‘For those willing to be
patient, the outperformance on
offer from a true deep value or
recovery portfolio represents the most
attractive opportunity available to equity
investors today.’
It wasn’t just equities that benefited
from positive returns from the emerging
markets. BlueBayAsset Management is
responsible for the emerging market
debt element of the Strategic Income
fund and noted that performance was
supported by holdings in a number of
Brazilian credits.While the Latin
American country has endured a
number of political and economic
challenges in recent years, the
appointment of Michel Temer as
president in 2016 has seen sentiment
improve, thanks to a number of policy
reforms. Holdings in more cyclical
corporate credits fromMidOcean and
TwentyFourAsset Management also
buoyed returns from the Strategic
Income fund.