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THE INVESTOR
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PORTFOLIO OVERVIEWS
DEFERRED INCOME
T
he Deferred Income
Portfolio posted a slightly
negative return over the
quarter.
TheWorldwide Income fund was the
largest detractor across the Portfolio.
The fund suffered due to its exposure
to consumer discretionary stocks,
among which 21st Century Fox suffered
the sharpest fall as it met with UK
regulatory delays ahead of its proposed
tie-up with Sky.
The UK High Income fund
also constrained overall Portfolio
performance.The fund, which is
managed by NeilWoodford, suffered
as a result of its exposure to Provident
Financial – among some negative
corporate announcements, Provident
delivered a profit warning.
The other fund to weigh on Portfolio
performance was the Global Equity
Income fund.The fund, managed by
Manulife, struggled over the period
as its exposure to consumer staples
hampered performance – British
AmericanTobacco, facing increasing
regulations, was a particular laggard.
The largest contribution to
performance came from the Strategic
Income fund.The multi-manager
fund is invested across both equities
and bonds. Schroders, manager of the
global high-dividend equity portion
of the fund, benefited from strong
quarterly performance within the
industrial sector.TwentyFour, manager
of the European high yield segment
of the fund, benefited from an increase
in capital values as yields fell. Elsewhere
in the Portfolio, exposure to high
yield bonds aided performance in
the Corporate Bond fund, managed
by Invesco.
The UK & International Income
fund made a positive contribution to
performance, aided by some strong
stock picks.The fund, managed by
Adrian Frost ofArtemis, benefited
from its allocation to Bayer, a German
chemicals and pharmaceuticals
company. Bayer continued to sell off its
stake in Covestro (its material sciences
division) during the quarter, raising
investor confidence in its financial
robustness as it plans for a 2018
acquisition of Monsanto, a chemicals
major.The German company also
benefited from domestic headwinds –
German stocks performed especially
strongly over the period.
The Equity Income fund also
aided performance.The fund, managed
by RWC Partners, benefited from
strong stock selection and exposure
to the materials sector.The energy
recovery that has characterised the
year thus far also played a part –
BHP Billiton, the mining company,
performed strongly.
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. The overviews provided are
based on the fund managers currently in the
relevant portfolios. Client Portfolios may have
different fund allocations and, therefore, some
of the fund managers referred to may not
apply to their holdings.
fund benefited from its exposure to
BHP Billiton, theAnglo-Australian
mining and metals conglomerate – the
company announced inAugust that
it would sell its shale oil operations
following pressure from shareholders.
The worst-performing fund in
the Portfolio was the UK High
Income fund, managed byWoodford
Investment Management, which
suffered due in significant part to
its holding in Provident Financial.
The lender lost significant value on
regulatory and management pressures,
and as it announced a profit warning.